Exhibit 10.1





Exhibit 10.1




ASSET PURCHASE AGREEMENT




This Asset Purchase Agreement (this “Agreement”) is made effective November 24, 2010 (the
“Effective Date”), by and among RIVER DOWNS INVESTMENT COMPANY, a California limited
partnership (“Seller”), RIVER DOWNS JOCKEY CLUB, INCORPORATED, an Ohio Corporation (“Jockey Club”),
RIVER DOWNS TURF CLUB, INCORPORATED, an Ohio corporation (“Turf Club,” and, collectively with
Seller and Jockey Club, the “Seller Parties” and each a “Seller Party”), OHIO VALLEY CONCESSIONS,
INC. an Ohio corporation (“Concessions”), PNK (OHIO), LLC, an Ohio limited liability company
(“Buyer”), and PINNACLE ENTERTAINMENT, INC., a Delaware corporation (“Pinnacle” and collectively
with Buyer, Seller Parties and Concessions, the “Parties”).



Background Information




WHEREAS, Seller is the owner of all of the assets of a thoroughbred horserace track known as
River Downs (the “Track”) located at 6301 Kellogg Avenue, Cincinnati, Ohio 45230;



WHEREAS, the Seller Parties and Concessions own the assets necessary to operate the Track (the
“Business”);



WHEREAS, the Track and Property (as defined below) are located in a flood plain and the
Business has been operating at a significant loss, and expects to continue to operate at a
significant loss during the term of this Agreement;



WHEREAS, as more particularly set forth in this Agreement, Buyer desires to purchase from the
Seller Parties and the Seller Parties desire to sell to Buyer substantially all of the assets of
the Seller Parties related to the operation of the Track and the Business;



WHEREAS, as more particularly set forth in this Agreement, Jockey Club and Turf Club each
agree to contribute, simultaneous with the Closing (as hereinafter defined), the Racing Licenses
(as hereinafter defined) to one or more newly-formed limited liability companies (the “LLCs”); and
the membership interests of such LLCs shall then be purchased by Buyer at the Closing;



WHEREAS, Seller Consent (as defined below) and Buyer Consent (as defined below) have been
obtained prior to the Effective Date; and



WHEREAS, the Parties are entering into this Agreement to set forth the terms and conditions of
such sale and purchase.


 


 









 





Statement of Agreement




The Parties hereby acknowledge the accuracy of the foregoing Background Information and, in
consideration of the premises and of the mutual covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:



Section 1. Purchase Of Assets 




Section 1.1 Assets. On the terms and subject to the conditions hereof, as of the
Effective Time, the Seller Parties and Concessions shall sell, assign, transfer, convey, and
deliver to Buyer, and Buyer shall purchase and acquire from the Seller Parties and Concessions, all
assets owned or leased (to the extent of Seller’s leasehold interest) (other than the Excluded
Assets (as hereinafter defined )) by the Seller Parties and Concessions and used or held for use in
the operation of the Track and the Business (collectively, the “Assets”), including without
limitation the following:




(a) All prepaid expenses (collectively, the “Prepaids”), and all inventories of
food, beverages, souvenirs, and consumable supplies located at the Track
(collectively, the “Inventories”);




(b) All furniture, fixtures, equipment, vehicles, rolling stock and other
tangible personal property owned by the Seller Parties or Concessions located at or
used in the operation of the Track (the “Equipment”);




(c) All names, trade secrets, proprietary rights, trademarks, trade names,
service marks, logos, copyrights, and web domain URLs, and related applications,
filings, registrations, licenses, sublicenses or agreements, including (without
limitation) the name River Downs (subject to Seller’s right to retain use of its name
“River Downs Investment Company” for up to six months pursuant to Section 4.5(c)
below), all computer software and systems used by Seller in the Business (to the
extent owned by the Seller Parties), and all goodwill and other intangibles, subject
to the provisions of this Agreement, together with all rights to sue, counterclaim,
and to collect damages and payments for and recover for any and all legal and
equitable claims of past, present, and future infringements, damages, or other
unauthorized use thereof, and all income, royalties, damages, and payments now or
hereafter due or payable with respect to the foregoing intangibles (collectively, the
“Intangibles”);




(d) 100% of the membership interests of the LLCs to which Jockey Club and Turf
Club agree to contribute, simultaneous with the Closing, the Racing Licenses (as
defined below) and, to the extent transferable, Pari-Mutuel Tax Abatements (as
defined below) related to the respective Racing Licenses. “Racing Licenses” shall
mean, collectively, (i) the thoroughbred racing permit and quarterhorse racing permit
issued by the Ohio State Racing Commission (the “OSRC”) to Jockey Club and (ii) the
thoroughbred racing permit issued by the OSRC to Turf Club (each individually, a
“Racing License”). “Pari-Mutuel Tax Abatements” shall mean the rights to the
pari-mutuel tax abatements and/or reductions for which the holders of the Racing
Licenses are eligible after the date of Closing;


 


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(e) To the extent assignable and subject to obtaining the Requisite Consents
(as hereinafter defined), all franchises, licenses, permits, consents,
authorizations, approvals and certificates which are necessary for Buyer to
continue to operate the Business as currently conducted and to own or lease any
property or assets utilized by the Seller Parties or Concessions in respect of the
Business in compliance with applicable law (the “Permits”), including without
limitation the Seller Parties’ and Concessions’ rights with respect to (i) the liquor
permits issued to Concessions by the Ohio Department of Liquor Control (the “Liquor
License”), (ii) the Racing Licenses, (iii) the Pari-Mutuel Tax Abatements, and (iv)
pending applications for any of the foregoing;




(f) All real property and buildings located thereon and improvements thereto,
and properties used for parking lots comprising the Track’s physical facilities as is
more particularly described on Schedule A.7. (collectively, the “Property”);




(g) All existing contracts, agreements, leases and legally binding contractual
rights of any kind, written or oral, relating to the operation of the Track or
Business, including but not limited to, the Horsemen’s Benevolent and Protective
Association contract, all contracts relating to off-track betting, closed circuit
television, cable television, broadcast and simulcast rights, and the totalizer
contracts, and those with annual payments greater than $10,000 annually (“Material
Contracts”) listed on Schedule 1.1(g) (collectively, the “Existing
Contracts”), together with all contracts, agreements, leases and legally binding
contractual rights entered into or acquired by Seller Parties or Concessions between
the date hereof and the Closing Date (as hereinafter defined) in the ordinary course
of business, consistent with past practices of Seller (“New Contracts”) and in
accordance with this Agreement and; provided, however, Buyer shall not be required to
assume or agree to assume any New Contracts with a term greater than one year and a
value greater than $25,000 which cannot be canceled with ninety (90) days prior
written notice) (collectively, Existing Contracts (including the Material Contracts),
together with New Contracts, the “Contracts”);




(h) Subject to Section 1.2(g), 1.2(i) and Section 1.2(l) below, all claims,
deposits, prepayments, prepaid assets, refunds, causes of action, rights of recovery,
rights of setoff and rights of recoupment of the Seller Parties relating to the
Business or the Assets, including any such rights of any Seller Party under any
property, casualty, workers’ compensation or other insurance policy (collectively,
“Insurance Rights"); provided, however, that Seller Parties and Concessions shall
retain any and all insurance proceeds or other payments or recoupments received by
them from insurance companies with respect to any funds in excess of any applicable
deductible amounts expended by Seller Parties or Concessions for repair, replacement,
etc. of any Assets prior to the Closing Date;




(i) Seller’s administrative rights, if any, in the River Downs Horsemen’s
Account (“Horsemen’s Account”);




(j) Seller’s administrative rights in the River Downs Fine Money Account (“Fine
Money Account”);


 


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(k) Seller’s administrative rights in the Mutuel Impound Account (“Impound
Account” and, together with the Horsemen’s Account and the Fine Money Account, the
“Bank Accounts”);




(l) To the extent relating to the Assets or any Assumed Obligation (as
hereinafter defined), all rights, claims, rebates, discounts and credits (including
all indemnities, warranties and similar rights), performance and other bonds,
security and other deposits, advance payments and prepaid rents in favor of Seller
relating to the operation of the Business or to any of the Assumed Obligations, in
each case, other than any Receivables (as hereinafter defined);




(m) Any Seller Party’s rights, if any, and only to the extent assignable and
subject to obtaining the Requisite Consents, with respect to gaming operations at the
Track (the “Gaming Rights”);




(n) To the extent transferable under applicable law, (i) all books and records
of Seller relating to the Business (except to the extent related to the Excluded
Assets (as hereinafter defined) or to Liabilities (as hereinafter defined) of Seller
or the Business other than the Assumed Obligations), including without limitation all
architectural, structural, service manuals, engineering and mechanical plans,
electrical, soil, wetlands, environmental and similar reports, studies and audits,
and (ii) all plans and specifications for the Property;




(o) All records of any Seller Party that relate to employees who are hired by
Buyer, but only to the extent that such records may be transferred under applicable
law, including without limitation records pertaining to: (i) skill and development
training, (ii) seniority histories, (iii) salary and benefit information (iv)
Occupational, Safety and Health Administration reports ad records, and (v) active
medical restriction forms (it being agreed and understood that with respect to the
foregoing clause (v), such forms have been made available to Buyer, but nothing
herein shall be deemed to require that Buyer accept any such forms);




(p) To the extent assignable and subject to obtaining all Requisite Consents,
all concession equipment and inventory owned by Concessions, excluding cash,
receivables and deposits;




(q) All manufacturers’ and other warranties applicable to the Assets or the
Business; and




(r) Any other tangible or intangible assets owned, leased or licensed by a
Seller Party (other than the Excluded Assets) which are located at the Property or
used in the Business.


 


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The Assets shall be conveyed to Buyer free and clear of all Liens and Liabilities other than
Assumed Obligations or Permitted Liens. As used herein, the term “Liens” shall mean any mortgage,
pledge, lien, security interest, conditional or installment sale agreement, option, right of first
refusal, restriction, exaction, imposition, charge or other claims of third parties of any
kind or nature, and the term “Liabilities” shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by
any person of any type, whether accrued, absolute, contingent, matured, unmatured, liquidated,
unliquidated, known or unknown. “Permitted Liens” shall mean current taxes not yet due and payable
and assessments, easements, covenants, restrictions, reservations of record, legal highways, zoning
ordinances and defects in title, encroachments or other matters that do not materially adversely
affect the continued use of the Property or Assets as currently used by the Seller Parties.
Additionally, Buyer and Pinnacle acknowledge and agree that the funds held in the Bank Accounts are
held for the benefit of others and shall not be included in the definition of Assets.



Section 1.2 Excluded Assets. Notwithstanding any other provisions of this Agreement to the
contrary, the Seller Parties’ right, title and interest in and to each of the following items (the
"Excluded Assets”) shall be excluded from the Assets and shall remain the property of Seller:




(a) All of the Seller Parties’ and Concessions’ cash, cash equivalents,
investments, cash funds for uncashed tickets, and deposits (including without
limitation all cash in the Track vault, petty cash, and cash in all concessions
booths at the Track), including without limitation certificates of deposit,
commercial paper, treasury bills, marketable securities, asset or money market
accounts and all such similar accounts or investments;




(b) All of the Seller Parties’ and Concessions’ accounts receivable, notes
receivable, and tax receivables (collectively, the “Receivables”);




(c) all tangible and intangible personal property of the Seller Parties and
Concessions disposed of or consumed in the ordinary course of business consistent
with the past practices of the Seller Parties and Concessions between the Effective
Date and the Closing Date;




(d) all Contracts that have terminated or expired prior to the Closing Date in
the ordinary course of business consistent with the past practices of the Seller
Parties;




(e) that certain Concession Agreement and Lease by and between Seller and
Concessions dated January 1, 1990, as amended through the date hereof;




(f) Each of the Seller Parties’ and Concessions’ respective corporate seals,
minute books, charter documents, corporate stock record books and such other books
and records as pertain to the organization, existence or share capitalization of a
Seller Party or Concessions (collectively, “Seller Records”) and duplicate copies of
such records as are necessary to enable the Seller Parties and Concessions to file
their respective tax returns and reports as well as any other original records or
materials relating to a Seller Party or Concessions generally and not involving or
relating to the Assets or the operation or operations of the Business;


 


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(g) contracts of insurance, and all insurance proceeds or claims thereunder
relating to property or equipment repaired, replaced or restored by Seller prior to
the Closing Date; further provided, that Seller Parties and Concessions shall retain
any and all insurance proceeds or other payments or recoupments received by them from
insurance companies with respect to any funds in excess of any applicable deductible
amounts expended by Seller Parties or Concessions for repair, replacement, etc. of
any Assets prior to the Closing Date;




(h) all pension, profit sharing or cash or deferred (Section 401(k)) plans and
trusts (except for the River Downs Investment Company 401(k) Plan (the “Seller 401(k)
Plan”), if Buyer elects to assume such plan pursuant to Section 10.3(a)), and the
assets thereof and any other employee benefit plan or arrangement and the assets
thereof, if any, maintained by a Seller Party or Concessions;




(i) any and all claims made by the Seller Parties and Concessions with respect
to transactions prior to the Closing Date and the proceeds thereof, other than those
with respect to Insurance Rights as provided for in Section 1.1(h) above, which
Insurance Rights are being transferred hereunder to Buyer as provided for in Section
1.1(h);




(j) the rights, interests or tangible or intangible assets of Seller listed on
Schedule 1.2(j);




(k) All of Seller’s corporate stock, including, without limitation, the shares
held by Seller of WellPoint, Inc., River Downs Management Company (“Management”),
Jockey Club and Turf Club;




(l) All deposits, including but not limited to those deposits listed on Schedule
1.2(l);




(m) The 2000 Cadillac STS used in connection with the Business;




(n) All rights and obligations of any Seller Party under any contract or
agreement by and between any Seller Party and RaceTech LLC;




(o) Quarterhorse accounting overpayment in the amount of $112,866.53
(“Quarterhorse Overpayment”); and




(p) Seller’s interest in “Bet Pad” (including Betpad, Ltd.) and “America Tab.”


 


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Section 2. Assumption of Liabilities.




(a) Assumption of Certain Liabilities. At the Closing, Buyer shall assume and shall
pay or otherwise satisfy or discharge in accordance with their terms all Liabilities under
the Permits or the Contracts accruing or arising on or after the Effective Time (as defined
below), and the Liabilities assumed by Buyer in Section 8.4 hereof
related to the non-compliance of the Property with CAFO Regulations (as defined below)
(collectively, the “Assumed Obligations”). At the Closing, Seller and Buyer shall enter
into an agreement effectuating Seller’s assignment and Buyer’s assumption of the Assumed
Obligations (the “Assignment and Assumption Agreement”).




(b) Non-Assumption of All Other Liabilities. Except for the Assumed Obligations,
Buyer has not assumed, undertaken, agreed to perform or accepted any responsibility for, and
does not and will not, in any way, assume, undertake, agree to perform or accept
responsibility for, any Liabilities of Seller Parties and Concessions of any kind, whether
such Liabilities be absolute, known or unknown, liquidated or unliquidated, contingent or
otherwise pending or threatened, incurred before the Effective Time (collectively, the
“Seller Retained Liabilities").




(c) Closing Adjustments.




(i) All income and expenses arising from the conduct of the Business and
operation of the Assets shall be prorated between Buyer and Seller as of the
Effective Time, including the thoroughbred horse purse but not the quarterhorse
purse (the “Net Proration Amount”), on the Closing Date in accordance with U.S.
generally accepted accounting principles (“GAAP”). Such prorations shall be based
upon the principles that Seller shall be entitled to all income earned and shall be
responsible for all liabilities and obligations accruing in connection with the
operation of the Business until the Closing Date, and Buyer shall be entitled to
such income earned and be responsible for such liabilities and obligations accruing
in connection with the operation of the Business thereafter. Such prorations shall
include, without limitation, all ad valorem and other property taxes and assessments
(the “Real Estate Taxes”) (but excluding taxes arising by reason of the transfer of
the Assets as contemplated hereby, which shall be paid as set forth in Section 7(c)
of this Agreement), deposits, utility expenses, rents and similar prepaid and
deferred items and all other expenses attributable to the ownership and operation of
the Business; provided, however, and notwithstanding anything in this Agreement to
the contrary, the Real Estate Taxes shall be paid and allocated as follows: Buyer
and/or Pinnacle shall pay all Real Estate Taxes with bill due dates subsequent to
the Effective Date; provided that Seller shall credit Buyer and Pinnacle an amount
equal to one half of the Real Estate Taxes payable in January 2011 (“January Tax
Bill”) and related to the first six (6) months of 2010 pursuant to Section 3(d).
Any amounts credited by Seller shall be based on the tax information and rates in
effect prior to Closing and there shall be no post-Closing adjustments. Buyer
and/or Pinnacle shall be responsible for the payment of all Real Estate Taxes that
become due and payable after the January Tax Bill date. The Net Proration Amount
shall be paid in accordance with Section 3(c) below.




(ii) Except as otherwise provided herein, the prorations and adjustments
contemplated by Section 2(c)(i), to the extent practicable, shall be made on the
Closing Date. As to those prorations and adjustments not capable of
being ascertained on the Closing Date, an adjustment and proration shall be
made within ninety (90) days after the Closing Date.


 


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(iii) Buyer and Seller shall determine whether the purse accounting, as of the
Effective Time, is underfunded (the amount of any such underfunding, the
“Underfunded Amount”) or overfunded (the amount of any such overfunding, the
“Overfunded Amount”), and the Underfunded Amount or Overfunded Amount, as the case
may be, shall be paid in accordance with Section 3(c) below.




(iv) In the event of any disputes between the parties as to such adjustments
set forth in Section 2(c), the amounts not in dispute shall nonetheless be paid at
the time provided in Section 2, the amounts in dispute shall be determined by an
independent certified public accountant mutually acceptable to the Parties, and the
fees and expenses of such accountant shall be paid one-half by Seller and one-half
by Buyer. Notwithstanding the foregoing, if the aggregate amount in dispute is
$10,000 or less, the disputed amount shall be shared equally by Buyer and Seller.




Section 3. Purchase Price.




(a) The total purchase price for the Assets shall be Forty-Five Million Dollars
and 00/100 ($45,000,000.00) plus the assumption of the Assumed Obligations by Buyer
(the “Purchase Price”). The Purchase Price (less the Escrow Fund (as defined below))
shall be made by bank wire transfer, by Buyer and/or Pinnacle, to an account
designated by Seller in immediately available funds; provided, however, Seller may
direct Buyer and/or Pinnacle to pay a specified amount of the Purchase Price to
Concessions (the “Ohio Valley Concessions Payment”). The Ohio Valley Concessions
Payment, which shall be in consideration for the Assets owned by Concessions, shall
be made by bank wire transfer to an account designated by Seller.




(b) At the Closing, Buyer shall assume the Assumed Obligations by executing and
delivering to Seller the Assignment and Assumption Agreement.




(c) If the Net Proration Amount (including the Underfunded Amount) results in a
credit in favor of Seller, the Purchase Price shall be increased accordingly in the
amount of the Net Proration Amount. If the Net Proration Amount (including the
Overfunded Amount) results in a credit in favor of Buyer, the Purchase Price shall be
reduced accordingly in the amount of the Net Proration Amount.




(d) The Purchase Price shall be decreased by the amount credited to Buyer by
Seller for one half of the Real Estate Taxes for the January Tax Bill pursuant to
Section 2(c)(i).




(e) The Purchase Price shall be increased by an amount not to exceed Thirty
Thousand Dollars ($30,000) for Seller Parties’ and Concessions’ fees and
expenses with respect to the preparation, negotiation and delivery of the legal
opinions set forth Section 7(a) (xiv) and Section 7(a)(xv).


 


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(f) The Purchase Price (including Assumed Obligations) shall be allocated among
the Assets (in accordance with section 1060 of the Code and the regulations
thereunder) pursuant to an allocation schedule mutually agreed to by the Parties (the
“Allocation Schedule”), which Allocation Schedule shall be consistent with the
allocation summary attached hereto as Exhibit E (the “Allocation Summary”). On or
before December 23, 2010, Buyer shall prepare and deliver to Seller a draft of the
Allocation Schedule. In the event of any disputes between the Parties as to such
draft Allocation Schedule that the Parties are not able to resolve, the amounts in
dispute shall be determined by an independent certified public accountant mutually
acceptable to the Parties, and the fees and expenses of such accountant shall be paid
one-half by Seller and one-half by Buyer. Buyer and Seller shall timely file
Internal Revenue Service Form 8594 and any required attachments thereto in accordance
with the Allocation Schedule. Except to the extent otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Internal Revenue Code
of 1986, as amended (the “Code”), neither Seller nor Buyer shall take a tax position
that is inconsistent with the allocation reflected in the Allocation Schedule.




(g) On the Closing Date, Buyer and/or Pinnacle shall deposit Five Hundred
Thousand Dollars ($500,000.00) of the Purchase Price (the “Escrow Fund”) into an
escrow account (the “Escrow Account”) established with U.S. Bank National Association
(the “Escrow Agent”) in accordance with the terms and subject to the conditions of an
Indemnification Escrow Agreement substantially in the form attached hereto as Exhibit
D and which is by and among Seller, Buyer, Pinnacle and the Escrow Agent (the
“Indemnification Escrow Agreement”). Subject to the terms and conditions of the
Indemnification Escrow Agreement, the Escrow Fund shall be held in the Escrow Account
for a period of six (6) months after the Closing Date solely as the exclusive fund
and remedy for the purpose of satisfying the indemnification obligations, if any,
which arise in such six-month period under Section 12.2 of this Agreement. Buyer,
Pinnacle and Seller shall execute the Indemnification escrow Agreement on the Closing
Date.



Section 4. Conditions to Closing & Closing.



Section 4.1 Conditions for Buyer. Notwithstanding any other provision of this Agreement to
the contrary, the obligation of Buyer to complete the closing of the transactions contemplated by
this Agreement (the “Transaction”) shall be subject to the satisfaction or waiver by Buyer of the
following conditions:




(a) All the terms, covenants and conditions of this Agreement to be complied
with or performed or satisfied by the Seller shall have been complied with or
performed or satisfied on or prior to the Closing Date.


 


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(b) The representations and warranties of the Seller (as applicable) set forth
in Exhibit A, shall be true and correct in all material respects on the date of this
Agreement and on the Closing Date (except to the extent such representations and
warranties specifically relate to an earlier date in which case such representations
and warranties shall be true and correct in all material respects on such earlier
date).




(c) No governmental authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and has
the effect of making the Transaction illegal or otherwise restraining or prohibiting
consummation of such Transaction.




(d) All approvals from the OSRC with respect to the transfers of the Racing
Licenses described in this Agreement (collectively, the “Requisite Consents”) shall
have been obtained in form and substance reasonably acceptable to Buyer.




(e) Seller shall have made or stand willing to make all the deliveries required
under Section 7(a).




(f) Buyer’s Member and Pinnacle’s Board of Directors shall have approved the
execution of and consummation of the transactions contemplated by this Agreement
prior to the Effective Date.




(g) Jockey Club and Turf Club shall, simultaneous with the Closing, have
contributed and transferred the Racing Licenses and to the extent transferable,
transferred the Pari-Mutuel Tax Abatements, to the LLCs in exchange for 100% of the
membership interests of the LLCs, as more fully described in Section 4.4(n) below.




(h) Seller shall have obtained a waiver from Ronald Plattner (“Plattner”) of any
rights or claims Plattner may have against any Seller Party, Concessions, Buyer or
Pinnacle in connection with the joint venture of Seller and Plattner pursuant to that
certain letter agreement by and between Seller and Plattner dated December 1, 2006,
in form and substance satisfactory to Buyer.




(i) If the consent and approvals needed for the transfer of the Liquor License
are not obtained prior to Closing, Concessions shall have executed and delivered to
Buyer the management agreement in the form attached hereto as Exhibit 4.2 (the
“Management Agreement”).




(j) Seller shall have completed and submitted to the OSRC an application for the
pari-mutuel tax abatements for which Seller is eligible as a result of flood damage
to the Property and/or Track from the 1997 Ohio River flood.


 


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(k) On or prior to the earlier of: (a) December 31, 2010, and (b) ten Business
Days after Buyer’s receipt of the Survey (as defined below) (the “Property
Contingency Period”):




(i) Buyer shall have approved the condition of title to the Property
(including, without limitation, approval of all covenants, easements, restrictions,
agreements and other matters of record relating to or which affect the Property);
provided, however, that Buyer may only disapprove the condition of title to the
Property if a defect (or defects) in title, individually or in the aggregate,
materially impair the current use of the Property or the ability of Buyer to use the
Property for Buyer’s intended use;




(ii) Buyer shall have received a certified ALTA survey (addressed to Buyer and
to Buyer’s title insurance company, if any) (the “Survey”), showing the acreage and
boundary lines of the Property and all improvements located thereon, the location of
any and all easements and encroachments affecting the Property, the location of all
curb cuts, public ways, streets, roads, driveways and utilities serving the Property
and any other matters specified by Buyer, and shall have approved such
Survey; provided, however, that Buyer may only disapprove a Survey matter if such
matter (or matters) individually or in the aggregate, materially impair the current
use of the Property or the ability of Buyer to use the Property for Buyer’s intended
use.




(l) Any matters approved by Buyer included in Paragraph 4.1(k) above shall not
have materially changed or been altered after the Property Contingency Period and
prior to Closing solely as a result of any act initiated by Seller with respect to
the Property that individually or in the aggregate, materially impair the ability of
Buyer to use the Property for Buyer’s intended use.




(m) Upon receipt of the Survey or any initial drafts, revisions or updates
thereof, Buyer shall promptly provide a copy of such Survey to Seller Parties.




(n) Buyer shall prepare new legal descriptions for those parcels included in the
Property for which such new legal descriptions are required for purposes of Buyer’s
title insurance policy.



Section 4.2 Conditions for Seller. Notwithstanding any other provision of this Agreement
to the contrary, the obligation of Seller to complete the closing of the Transaction shall be
subject to the satisfaction or waiver by Seller of the following conditions:




(a) All the terms, covenants and conditions of this Agreement to be complied
with or performed or satisfied by the Buyer shall have been complied with or
performed or satisfied on or prior to the Closing Date.




(b) The representations and warranties of the Buyer set forth on Exhibit B,
shall be true and correct in all material respects on the date of this Agreement and
on the Closing Date (except to the extent such representations and
warranties specifically relate to an earlier date in which case such
representations and warranties shall be true and correct in all material respects on
such earlier date).


 


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(c) No governmental authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and has
the effect of making the Transaction illegal or otherwise restraining or prohibiting
consummation of such Transaction.




(d) The Requisite Consents shall have been obtained.




(e) Buyer shall have made or stand willing to make all the deliveries required
under Section 7(b) and shall have paid or stand willing to pay the Purchase Price as
provided in Section 3.




(f) Seller shall have obtained requisite partnership approval of the execution
of and consummation of the transactions contemplated by this Agreement prior to the
Effective Date and the board of directors and shareholders of Jockey Club, Turf Club
and Concessions shall have approved the execution of and consummation of the
transactions contemplated by this Agreement prior to the Effective Date
(collectively, “Seller Consent”).




(g) Seller Parties shall have received the Survey as provided in Section 4.1(m)
and Buyer shall have provided to Seller Parties new legal descriptions for those
parcels included in the Property for which such new legal descriptions are required
for purposes of Buyer’s title insurance policy.



Section 4.3 Requisite Consents and Closing




(a) Buyer, Pinnacle and Seller Parties shall cooperate with each other and shall
assist each other in their respective efforts to obtain the Requisite Consents. The
Seller Parties agree to use commercially reasonable efforts to obtain consent and
approval from the OSRC with respect to the transfers of the Racing Licenses and, to
the extent transferable, the Pari-Mutuel Tax Abatements from each of Jockey Club and
Turf Club to the LLCs simultaneous with the Closing. The Seller Parties further
agree to submit to the OSRC an application for consent and approval with respect to
such transfers of the Racing Licenses and, to the extent transferable, the
Pari-Mutuel Tax Abatements, within five (5) Business Days after the Effective Date.
Buyer and Pinnacle agree to use their commercially reasonable efforts to obtain
consent and approval from the OSRC with respect the purchase by Buyer of the
membership interests of the LLCs that will hold the Racing Licenses subsequent to the
transfer described above to the LLCs. Buyer and Pinnacle further agree to submit to
the OSRC an application for consent and approval with respect to the transfer of the
membership interests and Racing Licenses within five (5) Business Days after the
Effective Date; provided that the Seller Parties provide, in a timely manner, such



 


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information
and cooperation as may be required of any Seller Party in connection with such application.
Notwithstanding anything else in this Agreement to the contrary, if the Requisite
Consents have not been obtained prior to December 15, 2010, and all other Closing
Conditions set forth in Sections 4.1 and 4.2 have been satisfied or waived except for
those which cannot be satisfied until Closing, then the Closing shall be postponed
until such time as the Requisite Consents are obtained, up to the Drop Dead Date (as
hereinafter defined). For the avoidance of doubt, the Closing shall not be postponed
solely due to a failure to obtain the consent and approvals needed for the transfer
of the Liquor License; and, in the event that the consent and approvals needed for
the transfer of the Liquor License are not obtained prior to Closing, Buyer shall
operate the Business pursuant to the Management Agreement.




(b) If the Closing is postponed under Section 4.3(a) above, then Buyer and/or
Pinnacle shall pay to Seller the following: (i) $150,000 for each full month that the
Closing has been postponed (and a pro-rated amount for any partial periods beginning
January 1, 2011), and (ii) an amount sufficient to pay the Real Estate Taxes that
become due subsequent to the Effective Date and before the Closing Date or
termination of this Agreement (collectively, the “Section 4.3(b) Payments”).
Pinnacle and/or Buyer shall pay the Section 4.3(b) Payments to Seller as follows: (x)
those funds described in Section 4.3(b)(i) for each applicable month shall be paid to
Seller on the earlier of the second Business Day after the day on which the monthly
meeting of the OSRC is held during each such month and the 25th day of
each such month, and (y) those payments required by Section 4.3(b)(ii) shall be paid
to Seller ten (10) days prior to the due date of the applicable Real Estate Taxes.
All Section 4.3(b) Payments advanced to Seller by Buyer and/or Pinnacle shall be
non-refundable to Buyer and/or Pinnacle.



Section 4.4 Obligations of Seller Parties and Concessions Prior to Closing. Until
this Agreement is terminated or expires as set forth herein and except as expressly permitted by
this Agreement and provided all Section 4.3(b) Payments have been paid when due, or with the prior
written consent of Buyer, which consent shall not be unreasonably conditioned, withheld or delayed,
the Seller Parties agree to the following:




(a) Seller will conduct its business only in the ordinary course of business
consistent with current practices and not enter into any agreements or commitments
other than at substantially prevailing market prices and on substantially prevailing
market terms except for (i) any commitments or agreements to repair, replace or
maintain Assets pursuant to which Seller Parties will received insurance proceeds to
cover such costs above the applicable insurance deductible, or (ii) any commitments
or agreements which respect to an Uninsured Loss (as defined below) for which Seller
Parties have or will received an Uninsured Loss Payment (as defined below) from Buyer
and/or Pinnacle;




(b) Seller will not enter into any agreement or commitments in an amount
exceeding $25,000 without the written consent of Buyer except for (i) any commitments
or agreements to repair, replace or maintain Assets pursuant to
which Seller Parties will received insurance proceeds to cover such costs above
the applicable insurance deductible, or (ii) any commitments or agreements which
respect to an Uninsured Loss (as defined below) for which Seller Parties have or will
received an Uninsured Loss Payment (as defined below) from Buyer and/or Pinnacle.


 


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(c) Seller will, except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer’s behalf, use commercially reasonable efforts to
preserve intact its current business organization, keep available the services of its
officers, employees, and agents and maintain its relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with it;




(d) Seller will otherwise report to, and as reasonably requested by, Buyer
concerning the status of Seller’s business, operations, and finances;




(e) Seller will make no material changes in management personnel without prior
consent of Buyer;




(f) Seller will keep in full force and effect, without amendment, all material
rights relating to Seller’s business;




(g) Seller will take all actions necessary to prosecute any licenses for video
lottery terminals (“VLTs”) granted (or that may be granted) to any Seller Party by
the Ohio Lottery Commission; provided that, if a Seller Party is required to make a
payment to any government agency or otherwise in connection with such licenses, Buyer
agrees to advance funds to Seller for such purposes; including but not limited to
attorney fees, staff costs and expenses, and all other fees and expenses associated
with the prosecution of the VLTs (“VLT Funds”) on the following terms and conditions:
All VLT Funds advanced by Buyer and/or Pinnacle shall be evidenced by one or more
promissory notes that: (i) shall bear no interest, (ii) shall have a maturity date
no later than two years after the date of the Closing, (iii) shall be canceled upon
the completion of a Closing under this Agreement with no reduction in Purchase Price,
and (iv) shall become immediately due and payable upon a Change in Control (as
hereinafter defined), other than a Change in Control resulting from the transactions
contemplated by this Agreement. “Change in Control” means the occurrence of any one
or more of the following without the prior consent of Buyer: the acquisition by any
individual, entity or group of beneficial ownership of more than 50% of the equity of
any Seller Party or Concessions; the consummation of a reorganization, merger,
consolidation or other business combination (any of the foregoing, a “Business
Combination”) of Seller with any other entity; or the consummation of a sale or other
disposition of all or substantially all of the assets of the Seller Parties;


 


14









 






(h) Seller will not, and will instruct Investors Commercial Capital, LLC, ABI
International, Inc., and any other broker or other person to whom the transactions
contemplated by this Agreement were submitted not to, directly or
indirectly, solicit, initiate, encourage, or entertain any inquiries or
proposals from, discuss or negotiate with, provide any nonpublic information to, or
consider the merits of any inquiries or proposals from any person (other than Buyer)
relating to any business combination transaction involving Seller, including the sale
Seller’s membership interests, the merger or consolidation of Seller, or the sale of
Seller’s business or any of the Assets (other than in the Ordinary Course of
Business). Seller shall notify Buyer of any such inquiry or proposal within
twenty-four (24) hours of receipt or awareness of the same by Seller;




(i) Seller will timely pay in full all taxes and other material obligations on
the Assets when such taxes and other obligations are due and payable; provided,
however, Seller shall not be obligated to pay any taxes or other obligations which it
is validly disputing;




(j) Subject to the disclosures made herein, Seller will maintain the Assets in a
state of repair and condition that is consistent with its current practices; further
provided, that Seller Parties shall not be required to repair, replace or maintain
any Asset or Assets which are damaged or part of a casualty loss, or otherwise
rendered inoperable and such repair or replacement or maintenance is not covered by
Seller Parties’ insurance (“Uninsured Loss”), provided, however, Seller Parties shall
replace, repair or maintain such damaged Asset or Assets if: (i) such replacement,
repair or maintenance is necessary to maintain the Permits, including without
limitation the Racing Licenses or to hold live racing at the Track, and (ii) Buyer
and/or Pinnacle advance the funds to cover the costs of such Uninsured Loss
(“Uninsured Loss Payment”). All Uninsured Loss Payments advanced by Buyer and/or
Pinnacle shall be evidenced by one or more promissory notes that: (i) shall bear no
interest, (ii) shall have a maturity date no later than two years after the date of
the Closing, (iii) shall be canceled upon the completion of a Closing under this
Agreement with no reduction in Purchase Price, and (iv) shall become immediately due
and payable upon a Change in Control (as hereinafter defined), other than a Change in
Control resulting from the transactions contemplated by this Agreement;




(k) Seller Parties and Concessions shall not be required to comply with any
Mandates (as defined below), except that if prior to or after the Effective Date,
Seller Parties or Concessions is required by any law, regulation, ordinance, CAFO
Regulations or the OSRC or any federal, state, county or local agency or department
to repair, replace or perform maintenance on any Asset, or obtain a permit, license
or otherwise take any action (collectively, a “Mandate”) and (i) such replacement,
repair, maintenance or action is necessary to maintain the Permits, including without
limitation the Racing Licenses, to hold live racing at the Track, or to avoid
additional fines, penalties or injunctive or similar relief, and (ii) Buyer and/or
Pinnacle advance the funds to cover the costs of such Mandate (“Mandate Payment”),
Seller shall repair, replace, maintain or take such actions as are necessary to
maintain the Permits, including without limitation the Racing Licenses or to hold
live racing at the Track. All Mandate Payments advanced by
Buyer and/or Pinnacle shall be evidenced by one or more promissory notes that:
(i) shall bear no interest, (ii) shall have a maturity date no later than two years
after the date of the Closing, (iii) shall be canceled upon the completion of a
Closing under this Agreement with no reduction in Purchase Price, and (iv) shall
become immediately due and payable upon a Change in Control, other than a Change in
Control resulting from the transactions contemplated by this Agreement;


 


15









 






(l) Seller will take no actions which directly or indirectly adversely impact
the validity or enforceability of this Agreement;




(m) The Seller Parties and Concessions shall (i) maintain all Permits required
for the continued operation of the Track on the Property and (ii) continue the
operation of the Track in the ordinary course of business consistent with current
practices and in a manner that allows Jockey Club and Turf Club to maintain the
Racing Licenses;




(n) The Seller Parties shall have duly organized the LLCs prior to Closing by
filing organizational documents reasonably acceptable in form and substance to Buyer
and the Seller Parties with the Secretary of State of the State of Ohio. Each of
Jockey Club and Turf Club shall have contributed the Racing Licenses held by it and
the related Pari-Mutuel Tax Abatements to the LLCs simultaneous with the Closing, in
exchange for all of the membership interests of the LLCs. The Seller Parties agree
to sell all of the membership interests of each of the LLCs to Buyer at Closing, and
to take only the actions described in this Agreement with regard to the LLCs;




(o) Seller shall cause Buyer and Pinnacle, at Buyer’s expense, if any, to be
named as additional insureds on its property insurance policies for the Property from
the Effective Date until the Closing; provided, that the insurance company is
agreeable to such addition; and further provided that, in the event that this
Agreement terminates prior to Closing pursuant to Sections 9.1 or 9.2, Seller shall
have the right, without the consent of Buyer or Pinnacle, to have Buyer and Pinnacle
removed immediately, without notice, as additional insureds on its property insurance
policies and Buyer and Pinnacle agree, at their expense, to take all actions
necessary to be removed as additional insureds upon a termination of the Agreement;




(p) Concessions will, within five (5) Business Days after the Effective Date,
submit written notice to the Ohio Lottery Commission of its intent to sell its
business to Buyer; and agrees to cooperate with Buyer in connection with the
application by Buyer to the Ohio Lottery Commission for an Ohio Lottery Retailer
License;




(q) Notwithstanding the provisions of Section 4.4(k) above, Seller Parties shall
use their commercially reasonable efforts to have completed the following compliance
corrections of which the Seller Parties were provided written notice by the OSRC
prior to the Effective Date that are required by the OSRC to
be completed after the close of the 2010 live racing season: paint all living
quarters in Dorm A and Dorm B, paint all stable area rest rooms, repair roofs on all
barns to be used in 2011 racing season, level all shed rows in the open barns,
install windows in Dorm B and eradicate bed bugs in Dorms A and B (collectively, the
“Racing Commission Corrections”);


 


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(r) Seller Parties shall use their commercially reasonable efforts to have
completed items set forth in a violation letter received from the Hamilton County
Department of Health by Seller prior to the Effective Date related to the sewer
plants, including but not limited to obtaining any required permits related thereto
(collectively, the “Health Department Corrections” and, together with the Racing
Commission Corrections, the “Site Corrections”).




Section 4.5 Obligations of Seller Post-Closing.




(a) After the Closing Date, Seller shall promptly reimburse Buyer for all
uncashed pari-mutuel tickets which were procured from the Track prior to Closing
(“Uncashed Tickets”) which Buyer pays out after the Closing upon presentment to Buyer
for payout by the legal holder of the Uncashed Ticket. Buyer shall provide Seller
with satisfactory supporting documentation of such payout upon request for
reimbursement of Uncashed Tickets from Seller. Seller shall establish a reserve
account to fund such Uncashed Tickets in an amount not to exceed $25,000 (the
“Uncashed Ticket Fund”). No more than once a month, Buyer shall provide to Seller a
detailed accounting of Uncashed Tickets (“Account Detail") which it pays out and
Seller shall reimburse Buyer for such amount within thirty (30) days of the receipt
of the request for payment. Any unresolved disputes which respect to the Account
Detail shall be decided by a mutually acceptable certified public accountant whose
fees shall be paid one-half by Buyer and one-half by Seller. Seller shall be
entitled to the release the balance of the Uncashed Ticket Fund on the first
anniversary of the Closing Date.




(b) Seller agrees to the covenants regarding tax matters set forth in Exhibit C
hereto.




(c) Seller agrees to file with the California Secretary of State, within six
months after the Closing, appropriate documentation to change the name of Management
and Seller to entity names which do not include the phrase “River Downs” or something
similar thereto.




(d) Should the OSRC require a third party review of the financial statements of
one or more of the Seller Parties to after Closing, each of the Seller Parties agrees
to provide such information and assistance as may be necessary for Buyer to have such
review conducted at Buyer’s own expense.


 


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Section 4.6 Obligations, Covenants and Acknowledgements of Buyer Prior to Closing 
and Post-Closing.




(a) Buyer will cooperate with all reasonable requests to take action which will
facilitate the Closing of the Transaction, including, without limitation, such
assistance as may be required in connection with the transfer of the Permits, Liquor
License and obtaining the Requisite Consents.




(b) Buyer acknowledges and agrees that the Track and Property is located in a
flood plain and the Business has been operating at a significant loss, and expects to
continue to operate at a significant loss during the term of this Agreement.




(c) Uncashed Tickets. Buyer shall promptly pay any Uncashed Ticket
presented to Buyer for payment by the legal holder of such Uncashed Ticket after the
Closing. Buyer shall provide Seller with satisfactory supporting documentation of
such payouts upon Buyer’s request for reimbursement of Uncashed Tickets from Seller.




(d) Quarterhorse Accounting Overpayment. Buyer shall reimburse Seller
for the Quarterhorse Overpayment as follows: within ten (10) days of the receipt by
Buyer of funds allocated to quarterhorse purses, Buyer shall remit such funds to
Seller up to the amount of the Quarterhorse Overpayment.




(e) Retention of and Access to Records. After the Closing Date, Buyer
shall retain, at no expense to Seller Parties or Concessions, for a period of seven
years those records and that confidential information of Seller Parties and
Concessions delivered to Buyer and/or Pinnacle, including without limitation any
accounting records of any Seller Party or Concessions delivered to Buyer. Buyer also
shall provide the Seller Parties and Concessions and their representatives reasonable
access thereto, during normal business hours and on at least three days’ prior
written notice, to enable them to prepare financial statements or tax returns or deal
with tax audits. After the Closing Date, Seller shall provide Buyer and its
Representatives reasonable access to records that are Excluded Assets to the extent
such records are related to Assets, Assumed Obligations or the payment of taxes,
during normal business hours and on at least three days’ prior written notice, for
any reasonable business purpose specified by Buyer in such notice. Buyer shall allow
Seller Parties and Concessions to maintain their Seller Records in the location in
which the Seller Records are currently kept for a period of six (6) months after the
Closing at no expense to Seller Parties or Concessions.




(f) Tax Matters Covenants. Buyer agrees to the covenants regarding tax
matters set forth in Exhibit C hereto.




(g) Should the OSRC require a third-party review of the financial statements of
one or more of the Seller Parties after Closing, Buyer agrees to have such review
conducted at Buyer’s own expense to satisfy the requirements imposed by the OSRC;
provided that each of the Seller Parties provides such information and assistance as
may be necessary to complete such review.


 


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(h) Buyer and Pinnacle covenant and agree that from and after the Effective Date
provided there is a Closing, Buyer and Pinnacle shall assume all obligations to
perform any actions necessary to complete the Site Corrections which were not
completed by Seller Parties prior to Closing and indemnify Seller Parties and
Concessions for any and all claims, losses, expenses, costs, fees, damages and/or
reasonable attorney fees (collectively, the “Damages”), including but not limited to
Damages related to fines, penalties or third party (including governmental and
quasi-governmental agency) claims, incurred by Seller Parties or Concessions as a
result of the Site Corrections not being completed, provided such obligation shall
not include any Damages, including but not limited to Damages related to fines,
penalties or third party (including governmental or quasi-governmental agency) claims
made or assessed against the Seller Parties with respect to the Site Corrections not
being completed prior to Closing, and any limitation or exclusion set forth in
Section 12 shall not apply to Buyer’s and Pinnacle’s indemnification obligations
under this Section.




(i) To the extent permitted by any law, rule or regulation, Buyer agrees to
cooperate with Seller Parties and Concession with respect to initiating voluntary
payroll deductions for any Transferred Employees, which such applicable Transferred
Employee agrees to, with respect to any amounts owed by the Transferred Employees to
the Seller Parties or Concessions.




(j) Buyer agrees to obtain all necessary surety bonds and/or provide guaranties
of performance as required by the OSRC or any other governmental authority with
respect to the Racing Licenses and use commercially reasonable efforts to assist
Seller Parties in having their current surety bond(s) and/or guaranties of
performance released as of the Closing.



Section 5. Closing. Subject to Section 9.1(c) and satisfaction or waiver of the
conditions of closing set forth in Sections 4.1 and 4.2, the closing of the Transaction (the
"Closing”) shall take place on the later of (a) December 15, 2010, and (b) five (5) Business Days,
after the date that the conditions to Closing set forth in Sections 4.1 and 4.2 have been satisfied
or waived (other than those conditions that by their nature are to be satisfied at Closing, but
subject to the satisfaction or waiver of those conditions at such time) or such other date as
otherwise mutually agreed upon by Buyer and Seller (the “Closing Date”). At the option of Seller,
the Closing shall (i) be by electronic exchange of the documents and funds transfer or (ii) take
place in the offices of Graydon Head & Ritchey LLP, Cincinnati, Ohio. If the Closing Date does not
fall on a Business Day then the Closing Date shall be on the next Business Day. The time and date
as of which the Transaction shall be deemed effective (the “Effective Time”) shall be 12:01 a.m.
Ohio time on the Closing Date. “Business Day” shall mean any day other than a Saturday, Sunday or
other days on which commercial banks in Ohio are authorized or obligated to close under applicable
laws.


 


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Section 6. Investigations; Condemnation; Damage; Possession.




(a) Investigations. Following the date hereof, Buyer and Buyer’s agents and
contractors will have the right (upon reasonable notice to Seller) to
conduct all tests, inspections, title searches, investigations, surveys and
other items (“Investigations”), deemed necessary by Buyer, in its sole discretion,
for Buyer’s potential ownership and use of the Business and Assets. Seller shall give
Buyer and Buyer’s agents and contractors the right to come onto the Property to do
all such Investigations (upon reasonable notice to Seller). All Investigations
completed by Buyer or Buyer’s agents or contractors shall be completed in a manner so
as to not unreasonably interfere with Seller’s ownership of the Assets or the
existing use and possession. During the course of the Investigations, Buyer shall
have the right to inspect and review (A) all studies, reports or other information
(environmental or otherwise) within Seller’s possession or control pertaining to the
Assets, (B) the insurance policies owned or maintained by Seller insuring or relating
to the Assets or the Business, (C) the Intangibles, (D) the Contracts, and (E) such
additional financial, operating, and such other relevant data and information as
Buyer may reasonably request; and Seller shall furnish Buyer with copies of the
documentation with respect to same. Seller shall cooperate and assist, to the extent
reasonably requested by Buyer, with all such Investigations. In addition, Buyer shall
have the right to have the Property inspected by Buyer’s agents and contractors, at
Buyer’s and Pinnacle’s sole cost and expense, for purposes of determining the
physical condition and legal characteristics of the Property. Buyer and Pinnacle
shall defend, hold harmless and indemnify Seller Parties and Concessions, from and
against all claims, liabilities, costs, fines and expenses (including without
limitation reasonable attorney fees and other litigation expenses) and damages
arising from or related to the conduct by Buyer or its agents in the performance of
the Investigations and any limitation or exclusion set forth in Section 12
shall not apply to Buyer’s and Pinnacle’s indemnification obligations under this
Section.




(b) Notice of Condemnation and Eminent Domain. Seller shall promptly notify
Buyer in writing if Seller receives a notice of condemnation and/or exercise of
eminent domain in respect of all or any part of the Assets. Unless such exercise of
eminent domain materially impairs Buyer’s ability to use the Assets, including the
Property, for Buyer’s intended use, Buyer and Pinnacle shall continue to be bound by
this Agreement, except that any and all compensation awarded for expropriation
(including without limitation all rights to loss of business, goodwill, fixtures,
moving and other expenses) and all right and claim of Seller to any such proceeds and
compensation not paid by the Closing Date shall be assigned to Buyer and retained by
Buyer as its sole property and sole remedy.




(c) Damage Before Closing. Seller shall insure the Assets until the Closing as
it currently insures the Assets (and use commercially reasonable efforts to renew any
policies of insurance which may expire prior to the applicable Closing Date). If
loss or damage to the Assets occurs from any cause (“Casualty”), whether or not
insured, then Seller shall promptly deliver a written notice to Buyer specifying the
nature and extent of the loss or damage and estimating the cost of and time to
complete repair and restoration, and whether the same is covered by insurance (the
“Notice of Loss”). Buyer and Pinnacle shall
continue to be bound by this Agreement except that any and all compensation
awarded for the loss or cost of repair covered by insurance and all right and claim
of Seller to any such proceeds and compensation not paid by the Closing Date shall be
assigned to Buyer and retained by Buyer as its sole property and sole remedy.



(d) Possession. If the Closing occurs, Buyer shall be entitled to exclusive
possession of the Assets as of the Closing.




 


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Section 7. Closing Deliveries.



(a) Seller’s Delivery Obligations. At the Closing, Seller Parties and Concessions shall
deliver to or for the benefit of Buyer the following (such documents shall either be
prepared by Buyer or shall be in a form approved by Buyer prior to the Closing):




(i) One or more recordable limited warranty deeds for the Property, executed by
Seller;




(ii) A bill of sale for the Inventories and the Equipment, executed by Seller
Parties and Concessions (the “Bill of Sale”);




(iii) An assignment and assumption agreement for the assignment of Seller
Parties’ and Concessions’ Contracts to Buyer (the “Assignment and Assumption
Agreement”), executed by Seller;




(iv) An assignment (or assignments) of the intangibles, executed by Seller (the
“General Assignments”);




(v) The Indemnification Escrow Agreement executed by Seller;




(vi) A certificate of each of the Seller Parties and Concessions signed on
behalf of each by such Party’s chief executive officer or chief financial officer
certifying that the closing conditions set forth in Sections 4.1(a) and (b)
applicable to such Party have been satisfied and that the Party has complied with
all other covenants and obligations of the Party under this Agreement applicable
between the Effective Date and Closing Date in all material respects;




(vii) A copy of the Seller Consent, certified by officers or managers of each
of the Seller Parties and Concessions, as applicable;




(viii) A certificate of non-foreign status under Section 1445 of the Code with
respect to the Property;




(ix) Such other assignment or conveyance documents as may be requested by
Buyer, including such documents as required to transfer the assets of Concessions to
Buyer;


 


21









 






(x) Such resolutions and other documents as may be reasonably requested by
Buyer to establish the authority of Seller Parties and Concessions to enter into the
Transaction;




(xi) Such other documents as shall be reasonably required to consummate the
purchase and sale of the Property, including, without limitation, the certificates
of title for the portions of the Property that are registered land;




(xii) All keys, security cards, security codes, remote devices, and all other
items required for access to all parts of the Track;




(xiii) Copies of the Requisite Consents obtained by Seller Parties and
Concessions on or prior to the Closing Date;




(xiv) A legal opinion of Graydon Head & Ritchey LLP, dated as of the Closing
Date, in the form of Exhibit F; and




(xv) A legal opinion of Sidley Austin LLP, dated as of the Closing Date, in the
form of Exhibit G.



(b) Buyer’s Delivery Obligations. At the Closing, Buyer shall deliver to Seller the
following:




(i) Payment of the Purchase Price as required in Section 3;




(ii) A certificate of each of Pinnacle and Buyer signed on behalf of each Party
by its chief executive officer or chief financial officer certifying that the
closing conditions set forth in Sections 4.2(a) and (b) applicable to such Party
have been satisfied and that such Party has complied with all other covenants and
obligations of the Party under this Agreement applicable between the Effective Date
and Closing Date in all material respects;




(iii) The Assignment and Assumption Agreement, executed by Buyer;




(iv) The General Assignments, executed by Buyer;




(v) The Indemnification Escrow Agreement, executed by Pinnacle and Buyer;




(vi) A copy of Buyer’s Consent certified by an officer of Buyer; and




(vii) Such other documents as shall be reasonably required to consummate the
purchase and sale of the Property.


 


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(c) Transfer Taxes. The costs of all transfer taxes, recording fees and
conveyance fees and expenses incurred in connection with the conveyance of the
Property shall be borne half by Seller and half by Buyer; provided that if the
total costs of all such taxes, fees and expenses exceeds $30,000, then the portion of
such costs borne by Seller shall be $15,000 and the remaining portion of such costs
shall be borne by Buyer.



Section 8. Representations and Warranties.



Section 8.1 Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer that all of the statements contained in Exhibit A attached to this Agreement are
true and correct in all material respects on the date of this Agreement and on the Closing Date
(except to the extent such representations and warranties specifically relate to an earlier date in
which case such representations and warranties shall be true and correct in all material respects
on such earlier date).



Section 8.2 Representations and Warranties of Buyer and Pinnacle. Buyer and Pinnacle
hereby represent and warrant to Seller that all of the statements contained in Exhibit B attached
to this Agreement are true and correct in all material respects on the date of this Agreement and
on the Closing Date (except to the extent such representations and warranties specifically relate
to an earlier date in which case such representations and warranties shall be true and correct in
all material respects on such earlier date).



Section 8.3 As Is/Where Is Sale. Buyer and Pinnacle acknowledge and agree that Buyer is
purchasing the Assets based solely upon Buyer’s inspection and investigation of the Assets and all
documents related thereto, or Buyer’s opportunity to do so. Buyer acknowledges and agrees that
Buyer and Buyer’s agents and representatives have been given full access to inspect and evaluate
the Assets prior to the date hereof. IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND
SHALL NOT AT ANY TIME BE DEEMED TO HAVE MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION, VALUE OR FUTURE USE OR
RELIABILITY OF ANY OF THE ASSETS, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS
AS TO CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUYER ACKNOWLEDGES AND
AGREES THAT, UPON CLOSING, SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT SUCH ASSETS
“AS IS, WHERE IS, WITH ALL FAULTS.” Buyer and Pinnacle have not relied and will not rely
on, and Seller is not liable for or bound by, any express, implied or statutory warranties,
guaranties, statements, representations or information of any kind pertaining to such Assets or
relating thereto made or furnished by Seller, other than the representations and warranties
expressly set forth on Exhibit A hereto. Without limiting the generality of the foregoing, Buyer
and Pinnacle acknowledge and agree that (i) Seller has advised Buyer and Pinnacle that the Property
is located in a flood plain, (ii) the Business has been operating at a loss, and (iii) no
representation or warranty has been made or will be made concerning the profitability of the
Business or the value or condition of the Assets at Closing, and Buyer and Pinnacle are hereby
waiving any claim against Seller Parties or Concessions based on any adverse change in the
profitability of the Business or value of the Assets.


 


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Section 8.4 Concentrated Animal Feeding Operations. Buyer and Pinnacle acknowledge that
Seller has informed Buyer and Pinnacle that the Property may not currently be in compliance with
applicable federal and state laws and regulations relating to concentrated animal feeding
operations (the “CAFO Regulations”). Buyer and Pinnacle shall have no right to postpone or delay
the Closing, or terminate this Agreement, as a result of the Property not being in compliance with
CAFO Regulations at Closing. Buyer and Pinnacle covenant and agree that from and after the
Effective Date, provided there is a Closing, Buyer and Pinnacle shall assume all obligations to
bring the Property into compliance with CAFO Regulations and indemnify Seller Parties and
Concessions for any Damages, including but not limited to Damages related to fines, penalties or
third party (including governmental and quasi-governmental agency) claims, incurred by Seller
Parties or Concessions as a result of the Property not being in compliance with CAFO Regulations,
provided such obligation shall not include any Damages, including but not limited to Damages
related to fines, penalties or third party (including governmental and quasi-governmental agency)
claims made or assessed against the Seller Parties with respect to the Property not being in
compliance with CAFO Regulations prior to the Closing, and any limitation or exclusion set forth in
Section 12 shall not apply to Buyer’s and Pinnacle’s indemnification obligations under this
Section. Except as provided in Section 4.4(k), the Parties agree that the Seller Parties shall
have no obligation under this Agreement to commence remediation with respect to CAFO Regulations
prior to the Closing.



Section 9. Default and Termination.



Section 9.1 Termination. This Agreement may be terminated prior to Closing by Buyer
and Pinnacle, on the one hand, or Seller, on the other hand, if the party seeking to terminate is
not in material default or breach of this Agreement, upon written notice to the other party upon
the occurrence of any of the following:




(a) if Buyer and/or Pinnacle on the one hand or Seller on the other hand is in
material breach of this Agreement and such breach has been neither cured within
twenty (20) Business Days after written notice of such breach nor waived by the party
giving such termination notice;




(b) if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling or
taken any other action, in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable;




(c) if the OSRC has not given its affirmative written consent to the
Transaction, including transfer of the Racing License, by March 31, 2011 (the “Drop
Dead Date”); or




(d) This Agreement may be terminated by written consent of Buyer, Pinnacle,
Concessions and Seller Parties.


 


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If any party believes the other party to be in breach or default of this Agreement, the
non-defaulting party shall, prior to exercising its right to terminate under Section 9.1(a),
provide the defaulting party with notice specifying in reasonable detail the nature of such breach
or default. Except for a failure to pay the Purchase Price, the defaulting party shall have twenty
(20) Business Days from receipt of such notice to cure such default; provided, that if the breach
or default is due to no fault of the defaulting party and is not capable of cure within such
20-Business Day period, the cure period shall be extended as long as the defaulting party is
diligently and in good faith attempting to effectuate a cure.




Section 9.2 Buyer or Seller Termination.




(a) Buyer shall be able to terminate this Agreement by providing written notice
to Seller Parties and Concessions pursuant to (i) Section 6(b) if an exercise of
eminent domain materially impairs Buyer’s ability to use the Assets, including the
Property, for Buyer’s intended use, or (ii) Section 4.1(k), if, during the Property
Contingency Period, the Survey is not received by Buyer or Buyer disapproves the
condition of title to the Property or a survey matter with respect to the Property
(each as set forth in Section 4.1(k); or




(b) Seller Parties and Concessions shall be able to terminate this Agreement by
providing written notice to Buyer and Pinnacle if the Survey is not received by
Seller Parties and Buyer during the Property Contingency Period.



Section 9.3 Effect of Termination. In the event of termination of this Agreement
pursuant to Sections 9.1 or 9.2, this Agreement (other than Section 4.3(b) relating to the Section
4.3(b) Payments, Section 4.4(g) relating to the VLT Funds, Section 4.4(j), Section 4.4(k),
Section 11 (Confidentiality) and Section 21 (Expenses), which shall remain in full force and
effect) shall forthwith become null and void, and no party hereto (nor any of their respective
affiliates, directors, officers or employees) shall have any liability or further obligation,
except as provided in this Section 9 and Section 12; provided, nothing in this Section shall
relieve any party from liability for any breach of this Agreement. If Seller terminates this
Agreement pursuant to 9.1(a), Seller shall be entitled to pursue any other right or remedy
available under this Agreement, applicable law or otherwise, and Seller shall be entitled to
recover reasonable attorneys fees and court costs. If Buyer terminates this Agreement pursuant to
9.1(a), Buyer shall be entitled to pursue any other right or remedy available under this Agreement,
applicable law or otherwise, and Buyer shall be entitled to recover reasonable attorneys fees and
court costs.


 


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Section 10. Employee Transition Matters.



Section 10.1 Employees.




(a) Notwithstanding any provision of this Agreement or any existing
confidentiality agreement to the contrary, from and after the date of this Agreement,
Buyer, shall have the right to discuss the terms of employment with the employees,
officers, agents and consultants of Seller Parties and Concessions (collectively, the
“Employer Parties”), and to offer to hire, and effective as of the Effective Time, to
hire and employ any or all of the Employer Parties’ employees
and officers, in Buyer’s sole discretion. Buyer will prepare and provide to
Seller at least five (5) days prior to the Closing Date a list of all of the Employer
Parties’ employees and officers that Buyer, in its discretion, elects to hire and
employ effective as of the Effective Time (each such employee and officer that
accepts Buyer’s offer individually referred to herein as a “Transferred Employee” and
all such employees and officers collectively referred to herein as the “Transferred
Employees”). Effective as of the Effective Time, the Employer Parties shall
terminate the employment of and unconditionally release each Transferred Employee
from any and all contractual restrictions or other obligations related to his or her
employment with the Employer Parties, including, without limitation, any employment
agreements and any non-competition and non-solicitation covenants or agreements
relating to the Business, whether contained therein or otherwise, without penalty to
the Transferred Employees. Buyer shall not be required to, and shall not, assume any
employment contracts or other agreements or obligations of the Employer Parties with
any Transferred Employee regarding or related to his or her employment with the
Employer Parties, including, without limitation, any change of control payments. The
terms and conditions of employment to be offered to the Transferred Employees shall
be established in Buyer’s discretion.




(b) If the Buyer is a successor employer of Seller for purposes of the Agreement
between Seller and I.A.T.S.E. Local B 754 (the “Union”) dated April 16, 2010, Buyer
agrees that upon demand from the Union, Buyer shall negotiate with the Union
regarding the wages, hours and other terms and conditions of employment of employees
represented by the Union.



Section 10.2 Retained Employees; Termination Costs. Any employees or officers of the
Employer Parties, as of the date of this Agreement, that are not Transferred Employees will be
referred to herein as “Retained Employees.” The Employer Parties shall be responsible for all
liabilities (i) relating to Retained Employees, whether terminated before or after the closing; and
(ii) relating to Transferred Employees, accrued or payable with respect to any pre-Closing period
or arising as a result of the Closing.




Section 10.3 Employee Benefits and Welfare Plans.




(a) Buyer may elect to, but shall not be required to, assume the Seller 401(k)
Plan as of Closing and at Buyer’s sole cost. If Buyer elects to assume the Seller
401(k) Plan, Buyer shall provide written notice of such election to Seller prior to
Closing.




(b) Except as set forth in Section 10.3(a) above, Buyer shall not assume any
liabilities and obligations of the Employer Parties relating to their employees or
employee benefits. Without limiting the foregoing, the Employer Parties shall
retain, and Buyer shall not assume, obligations and liabilities with respect to (i)
any plans or arrangements maintained, sponsored, contributed to, or required to be
contributed to by the Employer Parties relating to Transferred Employees, Retained
Employees, or any other present, former or retired employees of the
Employer Parties, including, without limitation, liabilities and obligations for
any retiree benefits and (ii) except as provided in this Section 10, any
employee-related liabilities arising at or before, or by reason of, the Closing, or
otherwise in respect of any period at or before the Closing.


 


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(c) The Employer Parties will retain liability for all workers’ compensation
liabilities of the Transferred Employees due to or based upon events occurring on or
before the Closing Date, whether or not filed on or before the Closing Date. Buyer
shall be liable for all workers’ compensation liabilities of the Transferred
Employees due to or based upon events occurring after the Closing Date.



Section 11. Confidentiality.




(a) Any Party (a “Receiving Party”) that receives any confidential or
proprietary information or data relevant to another Party (the “Disclosing Party”) or
such Disclosing Party’s business, whether of a technical or commercial nature, shall
not: (i) disclose to any person, association, firm, corporation or other entity
(other than the other Parties and their respective representatives, attorneys,
accountants, and agents or those designated in writing by the Disclosing Party or any
regulatory body that regulates activity of any Party or its parent, including the
OSRC) in any manner, directly or indirectly, or (ii) use, or permit or assist, by
acquiescence or otherwise, any person, association, firm, corporation or other entity
(other than the other Parties and their respective representatives, attorneys,
accountants, and agents or those designated in writing by the Disclosing Party or any
regulatory body that regulates activity of any Party or its parent, including the
OSRC) to use, in any manner, directly or indirectly, any such information or data,
excepting only (A) disclosure or use of such data or information as is at the time
generally known or available to the public and which did not become so known or
available through any breach of any provision of this section by a Party, (B)
disclosures of information on a confidential basis to directors, employees or
professional advisors of a Party who need to know such information and confidential
use of such information by employees or professional advisors of a Party who need to
use such information, in each use only to the extent necessary for the benefit of
such Party, (C) disclosures of information to the extent required by applicable law
(including, without limitation, the rules and regulations of the Securities and
Exchange Commission, any state securities commission or any gaming or racing laws) or
any listing agreement with, or the rules and regulations of, the New York Stock
Exchange and (D) disclosure by Buyer to any person, association, firm, corporation or
other entity (and its respective representatives, attorneys, accountants, and agents
or any regulatory body that regulates activity of any Party or its parent, including
the OSRC) considering whether to enter into a business relationship with Buyer with
respect to the Assets, Business or this Transaction, provided such person,
association, firm, corporation or other entity (and its respective representatives,
attorneys, accountants, and agents) agree to be
bound by the restrictions contained in this Section 11 and written notice is
provided to Seller.


 


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(b) If a Receiving Party becomes compelled in any proceeding or is requested by
a governmental body having regulatory jurisdiction over the Transaction to make any
disclosure that is prohibited or otherwise constrained by this Section 11, that
Receiving Party shall, to the extent not prohibited by any governmental body, provide
the Disclosing Party with prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate remedy or waive compliance
with the provisions of this Section 11. In the absence of a protective order or other
remedy, the Receiving Party so compelled or requested may make such the disclosures
as, based upon advice of the Receiving Party’s counsel, the Receiving Party is
legally compelled to make or that have been requested by such governmental body;
provided, however, that such Receiving Party shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded by any person to whom
such disclosures are made. The provisions of this Section 11 do not apply to any
proceedings between the parties to this Agreement.




(c) Each Receiving Party acknowledges and agrees that the Disclosing Party’s
remedies at law would be inadequate for any violation or any attempted violation of
the Receiving Party’s obligations under this section. In the event of any violation
or attempted violation of this section by a Receiving Party, the Disclosing Party
shall be entitled to a temporary restraining order, temporary and permanent
injunctions, and other equitable relief, without the necessity of posting any bond or
proving any actual damage, in addition to all other rights and remedies which may be
available to such Party from time to time.




(d) The confidentiality obligation under Sections 11(a), (b) and (c) shall not
apply to filings or disclosures to be made by the Seller, Buyer or Pinnacle with or
any other filing or disclosures required by or from the U.S. Securities and Exchange
Commission, the New York Stock Exchange, Inc., the OSRC, Louisiana Gaming Control
Board, the Indiana Gaming Commission, the Missouri Gaming Commission, the Nevada
Gaming Commission, the Nevada State Gaming Control Board, the City of Reno, Nevada
gaming authorities, the New Jersey Casino Control Commission, or any other state
securities commission or gaming authority or liquor authority or regulatory agency or
any governmental body.


 


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Section 12. Indemnification.



Section 12.1 Survival. The representations, warranties, covenants and obligations of
each Party shall survive the Closing to the extent provided in this Section 12.1. All
representations, warranties, covenants and agreements and related sections of the disclosure
schedules shall survive the Closing for a period of six (6) months after the Closing Date; provided
that the Specified Representations and Covenants (as hereinafter defined) shall survive and
continue until the expiration of the applicable statute of limitations. For purposes of this
Agreement, the representations and warranties set forth in Sections A.2, A.3, A.4, B.1 and B.2
and the related sections of the disclosure schedule, as applicable, shall be known as the
“Specified Representations”; and the covenants and agreements and the related sections of the
disclosure schedule, as applicable, set forth in Sections 4.5, 4.4(g), 4.4(j), 4.4(k), 10.3(c) and
11, and the Seller Retained Liabilities shall be known as the “Seller Specified Covenants”; and the
covenants and agreements and the related sections of the disclosure schedule, as applicable, set
forth in Section 4.6(c) — (g), Section 6(a), Section 8.4, Section 10.1(b), Section 10.3(a), if
applicable, Section 11, the Assumed Obligations set forth in Section 2(a), payment of the Purchase
Price and any Liabilities related to Buyer’s ownership and operation and conduct of the Business
and Assets on and after the Closing Date shall be known as the “Buyer Specified Covenants.” The
Specified Representations, Buyer Specified Covenants and Seller Specified Covenants together, shall
be known as the “Specified Representations and Covenants". Notwithstanding anything to the
contrary herein, if a claim notice relating to any representation, warranty, covenant or agreement
set forth in any of said Sections is given to the Party required to provide indemnification
pursuant to this Section 12 on or prior to the six-month anniversary of the Closing Date, if
applicable, then, notwithstanding anything to the contrary contained in this Section 12.1, such
representation, warranty, covenant or agreement shall not so expire, but rather shall remain in
full force and effect until such time as each and every claim that is based directly or indirectly
upon, or that relates directly or indirectly to, any breach or alleged breach of such
representation, warranty, covenant or agreement has been fully and finally resolved, either by
means of a written settlement agreement executed by the parties hereto, or by means of a final,
non-appealable judgment issued by a court of competent jurisdiction.



Section 12.2 Seller Indemnification. Seller shall indemnify, defend and hold harmless
Buyer and its affiliates and their respective representatives from and against any and all losses,
liabilities, damages, demands, claims, suits, actions, judgments or causes of action, assessments,
costs and expenses, including without limitation interest, penalties, reasonable attorneys’ fees,
any and all expenses incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation, asserted against, resulting to, imposed upon, or incurred or suffered by
Buyer, directly or indirectly, as a result of or arising from (i) any material inaccuracy in or
material breach of any of the representations or warranties expressly made by the Seller Parties or
Concessions in this Agreement, (ii) any failure to perform or comply with any covenants or
agreements expressly made by the Seller Parties and Concessions in this Agreement, or (iii) the
Seller Retained Liabilities. In the preceding sentence, the term “material” or “materially” shall
mean any inaccuracy in or breach of any of the representations or warranties expressly made by the
Seller Parties or Concessions in this Agreement or any failure by any Seller Party to perform or
comply with any covenants or agreements expressly made by the Seller Parties and Concessions in
this Agreement (other than with respect to the Seller Specified Covenants) with which Buyer or
Pinnacle makes a written indemnification claim under Section 12(i) or (ii) in good faith in an
amount equal to or exceeding $3,000.00. In the event that such a material inaccuracy in or
material breach of a representation or warranty expressly made by a Seller Party or Concessions in
this Agreement occurs or a Seller Party fails to materially perform or comply with any covenants or
agreement in this Agreement, the full amount of the indemnification claim made by Buyer or Pinnacle
in connection therewith shall be included in the calculation of the aggregate amount of losses for
which Buyer or Pinnacle is entitled to be indemnified under this Agreement pursuant to
Section 12.4(ii).


 


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Section 12.3 Buyer and Pinnacle Indemnification. Buyer and Pinnacle shall indemnify,
defend and hold harmless Seller Parties and Concessions and their respective affiliates
(collectively, the “Seller Indemnified Parties”) and their respective representatives from and
against any and all losses, liabilities, damages, demands, claims, suits, actions, judgments or
causes of action, assessments, costs and expenses, including without limitation interest,
penalties, reasonable attorneys’ fees, any and all expenses incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation, asserted against, resulting to, imposed
upon, or incurred or suffered by the Seller Indemnified Parties, directly or indirectly, as a
result of or arising from (i) any material inaccuracy in or material breach of any of the
representations or warranties expressly made by Buyer or Pinnacle in this Agreement, (ii) any
failure to materially perform or comply with any covenants or agreements expressly made by Buyer or
Pinnacle in this Agreement, (iii) the Assumed Obligations, (iv) the ownership and operation and
conduct of the Business and Assets on and after the Closing Date, (v) payment of the Purchase
Price, Section 4.3(b) Payments or payments pursuant to Section 4.6, or (vi) in accordance with
Section 6 or Section 8.4.



Section 12.4 Limitations. Seller shall have no obligation to Buyer or Pinnacle for
any matter described in Section 12.2, except upon compliance by Buyer or Pinnacle with the
provisions of this Section 12. Seller shall not be required to indemnify Buyer or Pinnacle under
Section 12.2 unless (i) written notice of a claim under this Section 12 was received by Seller
within the pertinent survival period specified in Section 12.1, and (ii) with respect to claims
under Sections 12.2(i) — (ii) (excluding Seller Specified Covenants), unless and until the
aggregate amount of losses for which the party is entitled to be indemnified under this Agreement
exceeds $250,000, after which Buyer and/or Pinnacle shall be entitled to recover amounts over such
$250,000 but limited as hereinafter set forth. Seller shall not have any liability to Buyer and/or
Pinnacle under any circumstances for special, consequential, punitive or exemplary damages. In no
event shall the Seller’s total liability to Buyer and/or Pinnacle under this Agreement with respect
to indemnification claims under Sections 12.2(i) — (ii) (other than breaches of representations and
warranties constituting fraud, and those with respect to the Specified Seller Covenants) exceed
$500,000.



Section 12.5 Sole Remedy. After the Closing, the right to indemnification under this
Section 12 shall be the exclusive remedy of any party in connection with any breach or default
(other than breaches or defaults constituting fraud) by another party under this Agreement;
provided that nothing in this Section 12.5 shall limit a Party’s right to seek equitable relief in
connection with the non-performance of any agreement or covenant with respect to the Specified
Seller Covenants or Specified Buyer Covenants.



Section 13. Notices. All notices and deliveries to be given or made in connection herewith
shall be deemed completed and sufficient if mailed, by certified mail, return receipt requested or
delivered by personal delivery or nationally recognized overnight courier service, effective upon:
(i) receipt or refusal to accept delivery with respect to personal delivery, (ii) the first
Business Day after deposit with an overnight courier service, provided that such notices and
deliveries shall be made to the respective parties for whom the same is intended if forwarded to
the parties at their addresses set forth below or to such other address or addresses as the parties
may notify each other in accordance with this Section 13.


 


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	 	(a)	 	If to a Seller Party or Concessions, to:







River Downs Investment Company, a California Limited Partnership

6301 Kellogg Road

Cincinnati, OH 45230

Attention: Jack Hanessian




and:




Jack Hanessian

680 Birney Lane

Cincinnati, OH 45230




with a copy to:




Graydon Head and Ritchey LLP

511 Walnut St.

1900 Fifth Third Center

Cincinnati, OH 45202

Attention: John J. Kropp




	 	(b)	 	If to Buyer or Pinnacle, to:







Pinnacle Entertainment, Inc.

8918 Spanish Ridge Ave.

Las Vegas, NV 89148

Attention: General Counsel




with a copy to:




Taft Stettinius & Hollister LLP

200 Public Square

Suite 3500

Cleveland, OH 44114

Attention: Irv Berliner



Section 14. Non-Waiver. No failure by any Party to insist upon strict compliance with any
term or provision of this Agreement, to exercise any option, to enforce any right, or to seek any
remedy upon any default of any other Party shall affect, or constitute a waiver of, any other
Party’s right to insist upon such strict compliance, exercise that option, enforce that right, or
seek that remedy with respect to that default or any prior, contemporaneous, or subsequent default.
No custom or practice of the Parties at variance with any provision of this Agreement
shall affect or constitute a waiver of, any Party’s right to demand strict compliance with all
provisions of this Agreement.


 


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Section 15. Genders and Numbers; Headings. Where permitted by the context, each pronoun
used in this Agreement includes the same pronoun in other genders and numbers, and each noun used
in this Agreement includes the same noun in other numbers. The headings of the various sections of
this Agreement are not part of the context of this Agreement, are merely labels to assist in
locating such sections, and shall be ignored in construing this Agreement.



Section 16. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which taken together shall constitute one and
the same Agreement. Any signature page that is faxed or transmitted electronically shall be
effective as an original signature page. Any signature page to any counterpart may be detached
from such counterpart without impairing the legal effect of the signatures thereon and thereafter
attached to another counterpart identical thereto except having attached to it additional signature
pages.



Section 17. Entire Agreement. This Agreement (including all exhibits, schedules, and
other documents referred to in this Agreement, all of which are hereby incorporated by reference)
constitutes the entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the Parties with respect to the subject matter of this Agreement. Buyer,
Pinnacle, Seller Parties and Concessions acknowledge and agree that neither Buyer or Pinnacle, nor
Seller Parties or Concessions have made any representation or warranty except as expressly set
forth in this Agreement or the other agreements, exhibits and schedules referenced in the
immediately preceding sentence. Any matter that is disclosed in a Schedule hereto in such a way as
to make its relevance to the information called for by another Schedule readily apparent shall be
deemed to have been included in such other Schedule, notwithstanding the omission of an appropriate
cross-reference. No amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing
signed by the party against whom enforcement of any waiver, amendment, change, extension or
discharge is sought. No failure or delay on the part of Buyer, Pinnacle, Seller Parties or
Concessions in exercising any right or power under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.



Section 18. Assignment; Successors. Neither Buyer nor Pinnacle may assign its rights under
this Agreement to any entity or person without Seller’s written consent, which consent may be
withheld by Seller for any reason or no reason. Seller Parties and Concessions may assign their
rights under this Agreement (without releasing Seller Parties or Concessions from their obligations
under this Agreement) at any time after the Closing Date, to any entity or person without Buyer’s
or Pinnacle’s consent. Subject to the forgoing, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against the Parties and their respective heirs, personal
representatives, successors, and assigns.


 


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Section 19. No Third Party Beneficiaries. Nothing contained in this Agreement, expressed
or implied, is intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the Parties, any rights, remedies or other benefits under
or by reason of this Agreement.



Section 20. Remedies. Except as otherwise provided in this Agreement, all rights and
remedies of each Party under this Agreement shall be cumulative and in addition to all other rights
and remedies which may be available to that Party from time to time, whether under any other
agreement, at law, or in equity. Seller Parties, Concessions and Buyer acknowledge and agree that
Buyer would be irreparably damaged if any of the provisions of this Agreement are not performed in
accordance with their specific terms and that any breach of this Agreement by Seller Parties or
Concessions could not be adequately compensated in all cases by monetary damages alone.
Accordingly, subject to and limited by Section 12.5, in addition to any other right or remedy to
which Buyer may be entitled, at law or in equity, it shall be entitled, after all notices have been
given and cure periods expired as set forth in this Agreement, to enforce any provision of this
Agreement by a decree of specific performance and to temporary, preliminary, and permanent
injunctive relief to prevent breaches or threatened breaches of any of the provisions of this
Agreement.



Section 21. Expenses. Except as otherwise provided in this Agreement, each of the Parties
will bear its respective legal, accounting, and other costs and expenses associated with the
transactions contemplated by this Agreement (including without limitation the costs of any brokers
and financial advisors).



Section 22. Announcements. No Party shall disclose any information relating to this
transaction except for such disclosures as may be required by applicable law or to such
professional advisors as may be necessary or appropriate in order to complete the transactions
contemplated by this Agreement without the prior written consent of Buyer, in the case of the
Seller Parties or Concessions, and Seller, in the case of Buyer or Pinnacle.



Section 23. Governing Law; Severability. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio without regard to principles of conflicts of law.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the
courts located in Hamilton County, Ohio and any state appellate court therefrom within the State of
Ohio. If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy or the application of this Agreement to any person or
circumstance is invalid or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any party. To such end, the
provisions of this Agreement are agreed to be severable. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties
as closely as possible in a mutually acceptable manner in order that the transactions contemplated
by this Agreement be consummated as originally contemplated to the fullest extent possible.


 


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Section 24. Amendment. This Agreement may be amended by the Parties at any time by
execution of an instrument in writing signed by both Parties.



Section 25. Construction. Each Party acknowledges that it and its counsel have reviewed
and revised this Agreement and that the normal rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or schedules thereto.



Section 26. Further Assurances. Each Party shall execute, acknowledge or verify, and
deliver any and all documents which may from time to time be reasonably requested by Buyer, Seller
Parties or Concessions, as applicable, to carry out the purpose and intent of this Agreement.



Section 27. Interpretation. For all purposes of this Agreement, except as otherwise
expressly provided:




(a) defined terms shall have the meanings assigned to them in this Agreement and
include the plural as well as the singular;




(b) all accounting terms not otherwise defined herein have the meanings assigned under
“GAAP”, as in effect on the date hereof, unless otherwise stated;




(c) all references in this Agreement to designated “Sections” and other subdivisions
are to the designated Articles, Sections and other subdivisions of the body of this
Agreement;




(d) all references in this Agreement to designated Exhibits or Schedules are to the
designated Exhibit or Schedule to this Agreement, unless otherwise indicated;




(e) the words “herein,” “hereof,” “hereby,” “hereunder” and “hereto” and other words of
similar import refer to this Agreement as a whole and not to any particular Article, Section
or other subdivision;




(f) the words “include,” “including” and other words of similar import mean “include,
without limitation” or “including, without limitation,” regardless of whether any reference
to “without limitation” or words of similar import is made;




(g) the phrase “made available” in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such information is to
be made available;


 


34









 






(h) any table of contents, table of definitions and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement;




(i) nothing contained herein shall create a joint venture or partnership between Buyer
and Seller, or an agency principal relationship; and




(j) this Agreement shall not be recorded, but at Buyer’s election with Seller’s
consent, a memorandum of this Agreement shall be recorded against the Property. If this
Agreement is terminated prior to the Closing, then the parties shall release the memorandum
of record.



[Remainder of page intentionally left blank. Signature page follows.]



 


35









 





Each of the undersigned confirms that it has read fully and understands this Agreement and the
schedules and exhibits attached hereto.



	 	 	 	 	 	 	 
	PNK (OHIO), LLC, AN OHIO LIMITED
LIABILITY COMPANY	 	RIVER DOWNS INVESTMENT COMPANY, A
CALIFORNIA LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	By
	/s/ John A. Godfrey	 	By	/s/ Edward J. Hanessian
	 
	 
	 	 	 
	Print Name  	John A. Godfrey	 	Print Name  	Edward J. Hanessian
	 
	 	 	 	 	 	 
	Title
	Vice President and Secretary	 	Title	President and General Partner
	 

	 
	 	 	 
	 
	 	 	 	 	 	 
	PINNACLE ENTERTAINMENT, INC., A DELAWARE CORPORATION	 	RIVER DOWNS JOCKEY CLUB, INCORPORATED, AN OHIO CORPORATION
	 
	 	 	 	 	 	 
	By
	/s/ John A. Godfrey	 	By	/s/ Edward J. Hanessian
	 
	 	 	 	 
	Print Name  	John A. Godfrey	 	Print Name  	Edward J. Hanessian
	 
	 	 	 	 	 	 
	Title
	Executive Vice President, General Counsel and Secretary	 	Title	President
	 
	 	 	 	 
	 
	 	 	 	 	 	 
	RIVER DOWNS TURF CLUB, INCORPORATED, AN OHIO CORPORATION	 	OHIO VALLEY CONCESSIONS, INC., AN OHIO CORPORATION
	 
	 	 	 	 	 	 
	By
	/s/ Edward J. Hanessian	 	By	/s/ Martin J. Stringer
	 
	 	 	 	 
	Print Name  	Edward J. Hanessian	 	Print Name  	Martin J. Stringer
	 
	 	 	 	 	 	 
	Title
	President	 	Title	President
	 
	 	 	 	 







 


 









 




JOINDER




The undersigned, in his capacity as Trustee, hereby joins in the execution of this Agreement
for the purpose of subjecting his interests in the Assets to the terms of this Agreement and for
the purpose of agreeing to convey the real property known as Hamilton County Auditor’s Parcel
Number 500-0460-0033 with an address of 6480 Kellogg Avenue (the “Trustee Parcel”) in accordance
with the terms and conditions set forth in this Agreement (and execute and deliver, to the extent
applicable to the Trustee Parcel, the documents referenced in Section 7(a) of this Agreement.



	 	 	 	 	 
	 	 	 
	 	/s/ Edward J. Hanessian
 	 
	 	Edward J. Hanessian, Trustee 	 
	 	 	 
	 




 















 







Exhibit A




Representations and Warranties of Seller




§A.1. Organization and Standing. Seller (a) is a limited partnership duly organized, validly
existing, and in full force and effect under the laws of the State of California with full power
and authority to own, lease, use and operate the Assets and to conduct the Business as and where
now owned, leased, used, operated and conducted, (b) is duly qualified to do business in Ohio and
is not doing business in any other jurisdiction in which failure to qualify would have an material
adverse effect on the Assets, (c) has not received any written notice or assertion within the last
twelve (12) months from any governmental official in any jurisdiction to the effect that it is
required to be qualified or authorized to do business in any such jurisdiction which would have a
material adverse effect on the Assets, and (d) is not in material default in the performance,
observation or fulfillment of any provision of its articles of organization, operating agreement,
or other organizational documents, each as amended to date. Each person executing this Agreement
on behalf of Seller represents and warrants that such person is duly authorized to act on behalf of
Seller in executing this Agreement.



§A.2. Power and Authority; Capacity; Binding Obligation. Each of the Seller Parties and
Concessions has all requisite power and authority to enter into this Agreement and to perform its
obligations under this Agreement. This Agreement and the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary action on the part of each of the
Seller Parties and Concessions, and their respective members or shareholders, as applicable. This
Agreement has been duly executed and delivered by each of the Seller Parties and Concessions and
constitutes the legal, valid and binding obligation of each of the Seller Parties and Concessions,
enforceable against each of the Seller Parties and Concessions in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereinafter in effect affecting creditors’ rights generally and general
principles of equity.


§A.3. Consents and Approvals. Except as set forth on Schedule A.3, neither the execution
and delivery of this Agreement by the Seller Parties and Concessions nor the consummation by the
Seller Parties and Concessions of the transactions to be consummated by it as contemplated by this
Agreement require or will require any action, consent, or approval of, or review by, or
registration with, any third party, court or governmental body or other agency instrumentality or
authority.



§A.4. Title to Assets. Except for Permitted Liens and as set forth on Schedule A.4, each
of the Seller Parties and Concessions has good, clear and valid title in and to the Assets
(excluding the Property) being transferred to Buyer, free and clear of all Liens or encumbrances
other than covenants, conditions and restrictions which do not materially adversely affect the
operation of the Business. With respect to the Property, except for Permitted Liens and as set
forth on Schedule A.4, the Property shall be free from encumbrances.


 


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§A.5. Contracts. Seller has delivered to Buyer true and accurate copies of all Material
Contracts of which Seller has a copy, a description of any written Material Contract of which
Seller does not have a copy, and a description of any oral Material Contract. To Seller’s
knowledge, no party to any Material Contract is in actual, alleged, or potential violation or
breach of, or default under, any Material Contract. Except as set forth in Schedule 1.1(g), to
Seller’s knowledge, the descriptions of oral Material Contracts and written Material Contracts of
which Seller does not have a copy include all material terms. To Seller’s knowledge, except for
the Material Contracts or as set forth in Schedule A.5 or Schedule 1.1(g), or expired Contracts
which Seller has provided a description of to Buyer, no other Contract or commitment is necessary
to conduct the Business as it is currently conducted.



§A.6. Legal Proceedings, etc. Except as set forth on Schedule A.6, there are no actions,
claims, proceedings, suits, orders or investigations pending, and Seller has not received notice of
any actions, claims, proceedings, suits, orders or investigations threatened, (i) against or
relating any Seller Party, the Business or any of the Assets by or before any federal, state, local
or foreign court or governmental body, agency, or authority, at law or in equity, or (ii) for the
purpose of enjoining or preventing the consummation of the sale and purchase of the Assets or any
other transactions contemplated by this Agreement or otherwise challenging the validity or
propriety of the transactions contemplated by this Agreement.



§A.7. Real Property. Schedule A.7 contains a complete list of the numbers currently
assigned by the Hamilton County Auditor to the parcels of real property that, together with all
buildings located thereon and improvements thereto, constitute the Property.



§A.8. Brokers, Finders. Except for Investors Commercial Capital, LLC and ABI International, Inc.,
the transactions contemplated by this Agreement were not submitted to Seller by any broker or other
person entitled to a commission, finder’s fee or like payment thereon and were not, with the
consent of Seller, submitted to Buyer by any broker or other person, and none of the actions of
Seller has given rise to any claim by any person for a commission, finder’s fee or like payment
against any of the Parties.



§A.9. Sufficiency of Assets. As of the date of this Agreement, the Assets (excluding the Excluded
Assets) constitute all of the material tangible and intangible assets currently used in the
operation of the Track and the Business.



§A.10. Permits. Seller Parties and/or Concessions, hold all Permits. As of the date hereof,
each Permit is valid, subsisting and in good standing and neither Seller nor Concessions is in
material default or breach of any Permit and no proceeding is pending or, to the knowledge of
Edward J. Hanessian, threatened to revoke or limit any Permit.



§A.11. Seller Financial Information. Seller has provided to Buyer true and correct copies of
Seller Parties’ financial statements (consisting of a balance sheet, income statement and statement
of cash flows) and for the past five calendar years (2004-2009) ((collectively, the “Financial
Information”). To the Seller’s knowledge, all such Financial Information is true and complete in
all material respects and fairly presents the assets, liabilities, financial condition and results
of operations of each Seller Party, as applicable, at such dates and for such periods.


 


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§A.12. Jockey Club, Turf Club and Concessions. Each of Jockey Club, Turf Club and Concessions (a)
is a corporation duly incorporated, validly existing, and in good standing under
the laws of the State of Ohio with full power and authority to own, lease, use and operate its
assets and to conduct its business as and where now owned, leased, used, operated and conducted,
(b) is not doing business in any other jurisdiction in which failure to qualify would have an
material adverse effect on the Assets, (c) has not received any written notice or assertion within
the last twelve (12) months from any governmental official in any jurisdiction to the effect that
it is required to be qualified or authorized to do business in any such jurisdiction which would
have a material adverse effect on the Assets, and (d) is not in material default in the
performance, observation or fulfillment of any provision of its articles of incorporation, code of
regulations, or other organizational documents, each as amended to date. Seller is the sole owner
of all of the capital stock of each of Jockey Club and Turf Club. Jockey Club and Turf Club hold
the Racing Licenses which are valid, subsisting and in good standing and neither Jockey Club nor
Turf Club are in material default or material breach of such Racing License and no proceeding is
pending or, to the knowledge of the Seller Parties, threatened to revoke or limit the Racing
License. Jockey Club and Turf Club own the Racing Licenses free and clear of all Liens or
encumbrances.



§A.13. Disclosure. No representation or warranty or other statement made by Seller in this
Agreement, the related disclosure schedules, any supplement to the disclosure schedules, or
otherwise in connection with the transactions contemplated by this Agreement contains any untrue
statement or omits to state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading in any material respect.


 


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Exhibit B




Representations and Warranties of Buyer




§B.1. Organization and Standing. Buyer (a) is a limited liability company duly organized, validly
existing, and in full force and effect under the laws of the State of Ohio with full power and
authority to own, lease, use and operate the Assets and to conduct the Business as and where now
owned, leased, used, operated and conducted, (b) is duly qualified to do business in Ohio and is
not doing business in any other jurisdiction in which failure to qualify would have an material
adverse effect on the Assets, (c) has not received any written notice or assertion within the last
twelve (12) months from any governmental official in any jurisdiction to the effect that it is
required to be qualified or authorized to do business in any such jurisdiction which would have a
material adverse effect on the Assets, and (d) is not in material default in the performance,
observation or fulfillment of any provision of its articles of organization, operating agreement,
or other organizational documents, each as amended to date. Pinnacle (a) is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State of Delaware, (b)
has not received any written notice or assertion within the last twelve (12) months from any
governmental official in any jurisdiction to the effect that it is required to be qualified or
authorized to do business in any such jurisdiction which would have a material adverse effect on
the Assets, and (c) is not in material default in the performance, observation or fulfillment of
any provision of its certificate of incorporation, by-laws or other organizational documents, each
as amended to date.



§B.2. Power and Authority; Capacity; Binding Obligation. Each of Buyer and Pinnacle has all
requisite power and authority to enter into this Agreement and to perform its obligations under
this Agreement. This Agreement and the transactions contemplated by this Agreement have been duly
and validly authorized by all necessary action on the part of each of Buyer and its member and
Pinnacle and its directors. This Agreement has been duly executed and delivered by each of Buyer
and Pinnacle and constitutes the legal, valid and binding obligation of each of Buyer and Pinnacle,
enforceable against each of Buyer and Pinnacle in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereinafter in effect affecting creditors’ rights generally and general principles of equity.



§B.3. Legal Proceedings, etc. There are no actions, claims, proceedings, suits, orders or
investigations pending, and neither Buyer nor Pinnacle has received notice of any actions, claims,
proceedings, suits, orders or investigations threatened, (i) against or relating to Buyer or
Pinnacle by or before any federal, state, local or foreign court or governmental body, agency, or
authority, at law or in equity that would have a material adverse effect on Buyer’s or Pinnacle’s
ability to consummate the deal, or (ii) for the purpose of enjoining or preventing the consummation
of the sale and purchase of the Assets or any other transactions contemplated by this Agreement or
otherwise challenging the validity or propriety of the transactions contemplated by this Agreement.


 


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§B.4. Brokers, Finders. Except for Investors Commercial Capital, LLC and ABI International,
Inc., the transactions contemplated by this Agreement were not submitted to Seller
by any broker or other person entitled to a commission, finder’s fee or like payment thereon
and were not, with the consent of Seller, submitted to Buyer by any broker or other person, and
none of the actions of Buyer has given rise to any claim by any person for a commission, finder’s
fee or like payment against any of the Parties.


§B.5. Governmental Authorization. The execution, delivery and performance by Buyer and Pinnacle of
this Agreement and the consummation of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with or notification to, any governmental authority other
than those set forth on Schedule B.5.



§B.6. Qualifications. Buyer and Pinnacle are legally, financially and otherwise qualified to be
the assignee and/or holder of all Permits and Racing License, acquire, own and operate the Assets
and Business in compliance with all applicable laws, rules, regulations and policies applicable
thereto. There are no facts known to Buyer or Pinnacle that would, under existing law and the
existing rules, regulations, policies and procedures of the applicable to the Assets and operation
of the Business, disqualify Buyer as an assignee and/or holder of the Permits and Racing License or
as the owner and operator of the Assets and Business.



§B.7. Financing. Buyer and Pinnacle have and during the time period from the Effective Date
through the date the Purchase Price is paid, Buyer and Pinnacle will have, sufficient cash and cash
equivalents available to perform its obligations hereunder, including but not limited to payment of
the Purchase Price. Buyer and Pinnacle have provided to Seller true and complete copies of
documentation supporting Buyer’s ability to perform its obligations set forth in the preceding
sentence. There are no conditions to the funding of the financing which Buyer or Pinnacle shall
use to fulfill its obligations hereunder, and no person or entity has any right to (i) impose any
condition precedent to such funding or (ii) reduce the amounts of the financing available to Buyer
or Pinnacle. Buyer’s and Pinnacle’s funding commitments are in full force and effect, in all
material respects, and there has been no default, action or omission to act that would permit the
termination or cancellation of Buyer’s or Pinnacle’s financing or funding.



§B.8. Condition of Property and Business. Each of Buyer and Pinnacle represents and warrants
that it is fully aware of the fact that the Track and Property is located in a flood plain and that
the Business has been operating at a significant loss, and expects to continue to operate at a
significant loss during the term of this Agreement. Each of Buyer and Pinnacle further represents
and warrants that it is fully aware of the fact that the Property may not be in compliance with
CAFO Regulations.



§B.9. Purchase for Own Account. Buyer represents and warrants that it is acquiring the Stock
for its own account, not as a nominee or agent, and not with a view to the resale or distribution
of any part thereof, and Buyer has no present intention of selling, granting any participation in,
or otherwise distributing the same.



 


2









 







Exhibit C




covenants regarding tax matters




§C.1. Buyer and the Seller Parties shall cooperate fully, as and to the extent reasonably
requested by each other party, in connection with the preparation and filing of any Tax Return (as
hereinafter defined), statement, report or form, any audit, litigation or other proceeding with
respect to Taxes of or relating to the Business. Such cooperation shall include the retention and
(upon the other party’s request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereunder. The Buyer and the Seller Parties agree (i) to retain all books and records
with respect to tax matters pertinent to the Business relating to any Pre-Closing Tax Period (as
hereinafter defined) for a period of seven (7) years at no expense to Seller Parties, and to abide
by all record retention agreements entered into with any Taxing Authority (as hereinafter defined),
and (ii) that the Seller Parties shall give the Buyer reasonable written notice prior to destroying
or discarding any such books and records and, if the Buyer so requests, allow the Buyer to take
possession of such books and records.



§C.2. The Seller Parties shall prepare and file, or cause to be prepared and filed, at their
expense, all Tax Returns with respect to any Pre-Closing Tax Period ending on or prior to the
Closing Date, and the Seller Parties shall timely pay all taxes shown as due on such Tax Returns.
All such Tax Returns will be filed when due in accordance with all applicable laws and consistent
with the past practices of the Business. Buyer shall prepare and file, or cause to be prepared and
filed, at its expense, all other Tax Returns with respect to the Business and shall timely pay all
taxes shown as due on such Tax Returns when due in accordance with all applicable laws. All taxes
relating to the Business which shall have accrued and become payable prior to the Closing Date
shall be paid by the Seller.


 


1









 






§C.3. For purposes of this Exhibit C, the following terms shall have the following meanings:




	 	(a)	 	“Pre-Closing Tax Period” means any tax period ending on or before the Closing
Date; and, with respect to a Straddle Tax Period, the portion of such Tax period ending
on the Closing Date.

	 
	 	(b)	 	“Tax Authority” means any governmental authority responsible for the imposition
of any tax.

	 
	 	(c)	 	“Tax Return” means a return, statement, report, election, declaration,
disclosure, schedule or form (including estimated tax or information return and report)
filed or required to be filed with any governmental authority responsible for the
imposition of any tax.

	 
	 	(d)	 	“Straddle Tax Period” means any taxable period beginning on or before, and
ending after, the Closing Date.







 


2











 




Exhibit D




INDEMNIFICATION ESCROW AGREEMENT




THIS INDEMNIFICATION ESCROW AGREEMENT (this “Agreement”) is made and entered into as of
November
 _____, 2010, by and among RIVER DOWNS INVESTMENT COMPANY, a California limited
partnership ("Seller”), and PNK (OHIO), LLC, an Ohio limited liability company ("Sub”), and
PINNACLE ENTERTAINMENT, INC., a Delaware corporation (“Pinnacle” and together with Sub, the
“Buyer”), and U.S. BANK, NATIONAL ASSOCIATION, a national banking association (“Escrow Agent”).



WITNESSETH:




WHEREAS, Seller, River Downs Jockey Club, Incorporated, an Ohio corporation (“Jockey Club”),
River Downs Turf Club, Incorporated, an Ohio corporation (“Turf Club”), and Ohio Valley
Concessions, Inc., an Ohio corporation (“Concessions”) and Buyer, are parties to a certain Asset
Purchase Agreement, dated as of November
 _____, 2010, as may be amended from time to time (the
“Purchase Agreement”), pursuant to which Seller, Jockey Club, Turf Club and Concessions will assign
or otherwise convey to Sub substantially all of the assets used or useful in connection with the
ownership and operation Seller’s, Jockey Club’s, Turf Club’s and Concession’s business (the
“Acquired Assets”), subject to the terms and conditions of the Purchase Agreement, and the closing
of the transactions contemplated by the Purchase Agreement are occurring simultaneously with the
execution hereof;



WHEREAS, pursuant to the Purchase Agreement, Buyer has agreed to deposit into escrow the
aggregate amount of Five Hundred Thousand Dollars ($500,000.00) (the “Escrow Deposit”) for the
purpose of satisfying indemnification claims by Buyer against Seller and/or Concessions pursuant to
Section 12.2 of the Purchase Agreement (“Buyer Indemnification Claims”); and



WHEREAS, Seller and Buyer desire Escrow Agent to serve as Escrow Agent for the Escrow Deposit,
and Escrow Agent is willing to do so, all upon the terms and conditions set forth in this
Agreement.



NOW, THEREFORE, in consideration of the mutual agreements and covenants contained in the
Purchase Agreement and this Agreement, the parties hereto agree as follows:



1. Deposit of Funds. Pursuant to Section 3(g) of the Purchase Agreement,
simultaneously with the execution hereof Buyer hereby deposits with Escrow Agent the Escrow Deposit
by wire transfer of funds, subject to the terms and conditions herein contained.



2. Receipt Acknowledged. By execution of this Agreement, Escrow Agent hereby
acknowledges receipt of the Escrow Deposit. Escrow Agent shall, at the written direction of
Seller, promptly invest and reinvest the Escrow Deposit in                      or any money
market account or fund investing solely in obligations of the United States or agencies, thereof,
provided that no such investment shall have a maturity of more than thirty (30) days from the date
of such investment unless specifically agreed to by Buyer and Seller, in the name of “River Downs -
Pinnacle Indemnification Escrow Deposit.” Seller shall provide its federal identification
number to Escrow Agent and authorizes Escrow Agent to file appropriate reports of interest earned
on the Escrow Deposit to the Internal Revenue Service.


 


 









 





The parties recognize and agree that the Escrow Agent will not provide supervision,
recommendations or advice relating to either the investment of moneys held in the Escrow Deposit or
the purchase, sale, retention or other disposition of any permitted investment. Interest and other
earnings on permitted investments shall be added to the Escrow Deposit. Any loss or expense
incurred as a result of an investment will be borne by the Escrow Deposit.



The Escrow Agent is hereby authorized to execute purchases and sales of permitted investments
through the facilities of its own trading or capital markets operations or those of any affiliated
entity. The Escrow Agent shall send statements to each of the parties hereto on a monthly basis
reflecting activity in the Escrow Deposit for the preceding month. Although the Seller and the
Buyer each recognizes that it may obtain a broker confirmation or written statement containing
comparable information at no additional cost, the Seller and the Buyer hereby agree that
confirmations of permitted investments are not required to be issued by the Escrow Agent for each
month in which a monthly statement is rendered. No statement need be rendered for the Escrow
Deposit if no activity occurred for such month.



3. Disposition of the Escrow Deposit. Escrow Agent shall hold and dispose of the
Escrow Deposit, as follows:




(a) In accordance with the joint written instructions of Seller and Buyer.



(b) After the date that is at least six (6) months following the date hereof, in accordance
with the written instructions of Seller delivered to Escrow Agent when accompanied by a certificate
executed by an officer of Seller certifying the amount of the Escrow Deposit subject to Buyer
Indemnification Claims, Escrow Agent shall pay to Seller the amount of the Escrow Deposit
not subject to Buyer Indemnification Claims along with the interest accrued on such amount;
provided, however, that prior to release of any portion of the Escrow Deposit in accordance with
such written instructions, Escrow Agent shall send to Buyer a copy of Seller’s written instructions
and Escrow Agent shall not release the Escrow Deposit to Seller if Escrow Agent receives, within
fifteen (15) days after it has delivered a copy of Seller’s instructions to Buyer, written notice
from Buyer objecting to release of the Escrow Deposit to Seller (“Buyer’s Rebuttal Notice”).



(c) In accordance with written instructions of Buyer delivered to Escrow Agent, when
accompanied by a certificate executed by officers of each Buyer certifying the amount of the Escrow
Deposit subject to Buyer Indemnification Claims, Escrow Agent shall pay to Buyer the amount of the
Escrow Deposit subject to Buyer Indemnification Claims; provided, however, that prior to the
release of any portion of the Escrow Deposit in accordance with such written instructions, Escrow
Agent shall send to Seller a copy of Buyer’s written instructions and Escrow Agent shall not
release the Escrow Deposit to Buyer if Escrow Agent receives, within fifteen (15) days after it has
delivered a copy of Buyer’s instructions to Seller, written notice from Seller objecting to release
of the Escrow Deposit to Buyer (“Seller’s Rebuttal Notice”).


 


2









 





(d) After timely receipt by Escrow Agent of Buyer’s Rebuttal Notice or Seller’s Rebuttal
Notice, Escrow Agent shall not deliver the Escrow Deposit until such time as Escrow Agent receives:
(i) a written agreement signed by Seller and Buyer providing instructions as to the disposition of
the Escrow Deposit, or (ii) a certified copy of an order or judgment from a court of competent
jurisdiction which has become final (meaning that the order or judgment is no longer subject to
appeal to or review by a court of competent jurisdiction) with respect to the disposition of the
Escrow Deposit, at which time Escrow Agent shall deliver the Escrow Deposit (along with interest
accrued thereon) in accordance with said agreement, order or judgment. Notwithstanding the
foregoing, after receipt by Escrow Agent of Buyer’s Rebuttal Notice or Seller’s Rebuttal Notice,
Escrow Agent may: (i) deposit the Escrow Deposit (along with interest accrued thereon) with any
court which has properly assumed jurisdiction of any dispute hereunder, or (ii) commence an action
in interpleader in any court of competent jurisdiction located in Cincinnati, Ohio and deposit the
Escrow Deposit (along with interest accrued thereon) with such court.




4. General Provisions.



(a) This Agreement shall become effective as of the date hereof and shall continue in force
until the final delivery of the Escrow Deposit and interest earned thereon by Escrow Agent pursuant
to the terms of this Agreement. This Agreement shall then terminate and the Escrow Agent shall be
discharged of all responsibility hereunder.



(b) All notices, demands or other communications required or permitted by this Agreement shall
be in writing and shall be: (a) delivered personally, (b) sent overnight delivery, charges prepaid,
by a nationally recognized overnight delivery service, or (c) by facsimile transmission, to all of
the following persons at the specified addresses or facsimile transmission phone number (or at such
other address or facsimile transmission phone number as any party may designate in writing to the
other parties):



	 	 	 	 	 
	If to Seller:	 	River Downs Investment Company

6301 Kellogg Road

Cincinnati, OH 45230

Attention: Jack Hanessian
	 
	 	 	 	 
	with a copy to:	 	 
	 
	 	 	 	 
	 

	 	 	 	Graydon Head & Ritchey LLP

511 Walnut St.

1900 Fifth Third Center

Cincinnati, OH 45202

Attention: John J. Kropp
	 
	 	 	 	 
	If to Buyer to:	 	Pinnacle Entertainment, Inc.

8918 Spanish Ridge Ave.

Las Vegas, NV 89148

Attention: General Counsel





 


3









 





	 	 	 	 	 
	with a copy to:	 	 
	 
	 	 	 	 
	 

	 	 	 	Taft Stettinius & Hollister LLP

200 Public Square

Suite 3500

Cleveland, OH 44114

Attention: Irv Berliner
	 
	 	 	 	 
	If to Escrow Agent:	 	 
	 
	 	 	 	 
	 

	 	 	 	U.S. Bank, National Association

Attn: Corporate Trust Department

425 Walnut Street

Cincinnati, Ohio 45202

Fax: (513) 632-5511






A copy of any notice of communication given by any party to any other party hereto shall be given
at the same time to every party to this Agreement. Each notice, demand or other communication
which shall be delivered or sent in the manner described above shall be deemed effective for all
purposes at such time it is actually delivered to the addressee (with the delivery receipt or the
affidavit of messenger or facsimile confirmation sheet being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the addressee upon
presentation.



(c) In no event shall the Escrow Agent be liable for any act or failure to act under the
provisions of this Agreement, except where its acts are the result of its own negligence or willful
misconduct. The Escrow Agent shall have no duties except those which are expressly set forth
herein, and it shall not be bound by any notice of a claim, or demand with respect thereto, or any
waiver, modification, amendment, termination or rescission of this Agreement, unless in writing
received by it and signed by Buyer and Seller. No right, duty or obligations of the Escrow Agent
hereunder shall be changed or modified without the Escrow Agent’s prior written consent.



(d) The Escrow Agent shall be protected in acting upon any written notice, request, waiver,
consent, receipt or other paper or document furnished to it in connection herewith, not only as to
its due execution and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained, which it reasonably believes to be genuine
and what it purports to be.



(e) The Escrow Agent may consult with counsel of its own choosing in connection with this
Agreement. Buyer, on the one hand, and Seller, on the other hand, jointly and severally, shall
indemnify and hold harmless the Escrow Agent for any liability, loss, claim or damage incurred by
the Escrow Agent in connection with this Escrow Agreement, including any claims by third parties,
unless such liability, loss, claim or damage is a result of Escrow Agent’s own gross negligence or
willful misconduct. This indemnification shall survive termination of this Agreement and the
resignation or removal of the Escrow Agent.


 


4









 





(f) The Escrow Agent may resign at any time by giving a minimum of thirty (30) days prior
written notice of resignation to both Buyer and Seller, such resignation to be effective on the
date specified in such notice. Any assets held by the Escrow Agent under the terms of this
Agreement as of the effective date of the resignation shall be delivered to a successor Escrow
Agent designated in writing by both Buyer and Seller. If the other parties hereto have failed to
appoint a successor prior to the expiration of thirty (30) days following receipt of the notice of
resignation or removal, the Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent or for other appropriate relief, and any such resulting
appointment shall be binding upon all of the parties hereto.



(g) Escrow Agent is not a party to, and is not bound by, any agreement other than as expressly
set forth herein. In the event that any of the terms and provisions of any other agreement
(excluding any amendment to this Agreement) between any of the parties hereto, conflict or are
inconsistent with any of the provisions of this Agreement, the terms and provisions of this
Agreement shall govern and control in all respects.



(h) Except as provided in Section 4(i), Seller, on the one hand, and Buyer, on the other hand,
shall each pay one-half of Escrow Agent’s fees and necessary out of pocket expenses it incurs for
acting as Escrow Agent hereunder subsequent to the date of this Agreement in administering this
Agreement, including without limitation legal fees, wire charges, postage, long distance calls and
express mail, which fees and expenses shall be in accordance with its customary fee schedule.
Buyer and Seller agree that Escrow Agent may withdraw the escrow fees and expenses from any
interest accrued on the Escrow Fund but not from the principal on a quarterly basis from time to
time; provided, however, that Escrow Agent notify both Buyer and Seller in writing on no less than
a quarterly basis of the amount of such escrow fees and expenses imposed during the prior period.



(i) In the event that Buyer or Seller files a lawsuit or institutes arbitration or other
formal legal action against the other (including any counterclaim to a lawsuit filed by the other
party) to enforce its right to the Escrow Deposit and any interest earned thereon under this
Agreement, the prevailing party shall be reimbursed by the other party (either Seller or Buyer, as
the case may be) and the non-prevailing party shall reimburse the Escrow Agent for all expenses
incurred therewith, including reasonable attorneys’ fees.



(j) The Escrow Agent shall be under no obligation to invest the deposited funds or the income
generated thereby until it has received a Form W-9 or W-8, as applicable, from the Buyer and the
Seller, regardless of whether such party is exempt from reporting or withholding requirements under
the Internal Revenue Code of 1986, as amended.



(k) IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES
OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM
THE ESCROW AGENT’S FAILURE TO ACT IN ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS AGREEMENT, OR
(ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.


 


5









 





(l) The Escrow Agent shall have the right to perform any of its duties hereunder through
agents, attorneys, custodians or nominees.



(m) Any banking association or corporation into which the Escrow Agent may be merged,
converted or with which the Escrow Agent may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Escrow Agent shall be a party, or any banking
association or corporation to which all or substantially all of the corporate trust business of the
Escrow Agent shall be transferred, shall succeed to all the Escrow Agent’s rights, obligations and
immunities hereunder without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.



(n) No printed or other matter in any language (including, without limitation, prospectuses,
notices, reports and promotional material) that mentions the Escrow Agent’s name or the rights,
powers or duties of the Escrow Agent shall be issued by the other parties hereto or on such
parties’ behalf unless the Escrow Agent shall first have given its specific written consent
thereto.



(n) Capitalized terms used herein and not defined herein or otherwise conventionally
capitalized shall have the meanings ascribed thereto in the Purchase Agreement.



(o) This Agreement shall be binding upon and inure to the benefit of the parties, their
successors and assigns.



(p) This Agreement sets forth the entire agreement between Seller, Buyer and Escrow Agent and
supersedes any and all prior and contemporaneous agreements and understandings with respect to the
escrow of funds to satisfy Buyer Indemnification Claims.



(q) The construction and performance of this Agreement shall be governed by the laws of the
State of Ohio without giving effect to the choice of law provisions thereof. Any action, suit or
proceeding brought by any party to this Agreement relating to or arising out of this Agreement or
any other agreement, instrument, certificate or other document delivered pursuant hereto (or the
enforcement hereof or thereof) must be brought and prosecuted as to all parties in, and each of the
parties hereby consents to service of process, personal jurisdiction and venue in, the state and
federal courts of general jurisdiction located in Cincinnati, Ohio. This Agreement may be executed
in one or more counterparts, including faxed counterparts, each of which will be deemed an original
and all of which together will constitute one and the same instrument.



(r) All signatories to this Agreement warrant that they have full and complete authority to
enter into this Agreement and to sign this Agreement on behalf of themselves and the entity on
whose behalf they are signing.



[SIGNATURE PAGES FOLLOW]



 


6









 







SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT




IN WITNESS WHEREOF, the parties have executed this Indemnification Escrow Agreement as of the
date and year first written above.



	 	 	 	 	 
	 	RIVER DOWNS INVESTMENT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 


7









 





SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT




	 	 	 	 	 
	 	PNK (OHIO), LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PINNACLE ENTERTAINMENT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 


8









 







SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT




	 	 	 	 	 
	 	
 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



 


 









 





Exhibit E




Allocation Summary




Concessions





Furniture, fixtures, equipment not to exceed $100,000

Leasehold improvements not to exceed $50,000

Goodwill, licenses, other intangibles $1,800,000, less above two items



RDIC





Furniture, fixtures, equipment not to exceed $500,000

Land and buildings and improvements not to exceed $9,000,000

Goodwill, licenses, other intangibles $43,200,000, less above two items



The “not to exceed” amounts will be finalized by Buyer (after discussions with KPMG) and will be
furnished to Seller Parties prior to Closing.


 


 









 





Exhibit F




LEGAL OPINION — GRAYDON HEAD




[Proposed Ohio Opinion Letter]




November [__], 2010




Pinnacle Entertainment, Inc.

8918 Spanish Ridge Avenue

Las Vegas, NV 89148




PNK (Ohio), LLC

8918 Spanish Ridge Avenue

Las Vegas, NV 89148




Ladies and Gentlemen:



We have acted as Ohio counsel to River Downs Investment Company, a California limited partnership
(“Seller”), River Downs Jockey Club, Incorporated, an Ohio corporation (“Jockey
Club”), River Downs Turf Club, Incorporated, an Ohio corporation (“Turf Club”), and
Ohio Valley Concessions, Inc., an Ohio corporation (“Concessions,” and collectively with
Seller, Jockey Club and Turf Club, the “Seller Parties”) (Jockey Club, Turf Club and
Concessions are also sometimes referred to collectively herein as the “Ohio Parties”) in connection
with the closing under the Asset Purchase Agreement dated as of November [_____], 2010 (the
“Agreement”) by and among the Seller Parties, Pinnacle Entertainment Group, Inc. a Delaware
corporation (“Pinnacle”) and PNK (Ohio), LLC (“Buyer”). This letter is being
provided pursuant to Section 7(a)(vx) of the Agreement. Capitalized terms used in this
letter that are defined in the Agreement shall have the respective meanings set forth in the
Agreement unless otherwise defined herein or unless the context clearly requires otherwise.



1. DOCUMENTS REVIEWED




(a) Documents Reviewed—Transaction Documents. In connection with our opinions provided in
this letter, we have reviewed copies of the following documents and instruments (collectively, the
“Transaction Documents”):




(i) the Agreement;




(ii) the Bill of Sale from Seller Parties to Buyer dated as of                     , 2010;



(iii) the Assignment and Assumption Agreement between Seller Parties and Buyer dated as of
                    , 2010;



(iv) the Escrow Indemnification Agreement to which Seller and Buyer are parties dated as of
                    , 2010; and



(v) the Management Agreement between Concessions and Buyer dated as of                     , 2010.


 


 









 





(b) Documents Reviewed—Other Documents Examined. In addition to the Transaction Documents,
we have also examined and relied upon copies of the following given to us by the Seller Parties in
connection with our opinions:




(1) Limited Partnership Agreement of River Downs Investment Company;




(2) Articles of Incorporation of River Downs Jockey Club, Incorporated;




(3) Ohio Secretary of State Good Standing Certificate for River Downs Jockey Club,
Incorporated, dated November 16, 2010;




(4) Code of Regulations or Bylaws for River Downs Jockey Club, Incorporated;




(5) Articles of Incorporation of River Downs Turf Club, Incorporated.;




(6) Ohio Secretary of State Good Standing Certificate for River Downs Turf
Club, Incorporated, dated November 16, 2010;




(7) Code of Regulations or Bylaws for River Downs Turf Club, Incorporated;




(8) Articles of Incorporation of Ohio Valley Concessions, Inc.;




(9) Ohio Secretary of State Good Standing Certificate for Ohio Valley Concessions, Inc., dated
November 16, 2010;




(10) Code of Regulations or Bylaws for Ohio Valley Concessions, Inc.;




(11) Certificate addressed to this law firm of Seller;




(12) Certificate addressed to this law firm of River Downs Jockey Club, Incorporated;




(13) Certificate addressed to this law firm of River Downs Turf Club, Incorporated; and




(14) Certificate addressed to this law firm of Ohio Valley Concessions, Inc.



In addition to our review of the Transaction Documents, we have made such other examinations
and inquiries that we have deemed necessary and/or appropriate as the basis for the opinions herein
after expressed.


 


2









 





We understand that you are obtaining a separate opinion from California counsel in regard to
the Seller and certain California law issues and our opinion does not address any such California
law issues.



(The Certificates identified as items 11-14 above are sometimes referred to herein as the
“Certificates”) (the foregoing items 1-10 are sometimes referred to herein as the “Governing
Documents” and each a “Governing Document”).



2. ASSUMPTIONS




In our examination, we have assumed the genuineness of all signatures (other than the Seller
Parties), the legal capacity and competency of all natural persons, the authenticity of all
documents submitted to us as originals and the conformity to authentic original documents of all
documents submitted to us as certified or photostatic copies.



In such review we have relied upon information in documents and certificates issued by public
officials and upon information provided by officers of the Seller Parties and others, without
investigation or analysis of any underlying data supporting information contained in such documents
or certificates, including certificates of the Seller Parties, including the Certificates. We have
also relied on the representations and warranties of the Seller Parties in the Transaction
Documents, which reliance we believe is justifiable and we have no knowledge to the contrary.



Whenever in this letter the phrase “to our knowledge” is used, it means the conscious
awareness of facts or other information by the lawyers in this firm who have devoted substantive
attention to negotiating this transaction or preparing the Transaction Documents without
independent investigation, which is John J. Kropp, Esq., Karen J. Renz, Esq. and Gerald F.
O’Connell, Jr., Esq.



We have also assumed that each party to this transaction (other than the Seller Parties) has
satisfied those legal requirements that are applicable to it to the extent necessary to make the
Transaction Documents enforceable against it.



We have also assumed that the Seller, River Downs Investment Company, is a California limited
partnership duly formed, validly existing in good standing under the laws of the State of
California, with full power and authority to enter into the Transaction Documents and fulfill its
obligations hereunder, and that it has duly authorized, executed and delivered the Transaction
Documents.



We have further assumed that all parties have acted and will act in good faith, without fraud,
duress, undue influence, or a lack of conscionability or fair dealing. With respect to applicable
law, we have assumed the constitutionality of all relevant law and the general availability of all
relevant decisions, rules and regulations to lawyers practicing in the State of Ohio.


 


3









 





We understand that with respect to title matters, you will be relying on a title insurance
commitment and UCC searches. We have not made or undertaken to make any investigation of the state
of title to any real or personal property or of the filing or recordation of any deeds, releases,
etc. that are intended to be filed or recorded, and we express no opinion with respect to (i) the
adequacy or legal sufficiency of the description of, or the title to, any of the real property or
personal property described in any of the Transaction Documents, (ii) whether those Transaction
Documents intended to be recorded or filed have in fact been duly recorded, filed, or indexed, or
(iii) the priority, perfection or subordination of any liens whatsoever. Our investigation has
been limited to a review of the Transaction Documents, and we have not conducted any investigation
of any property, and we offer no opinion as to the physical condition of any property or as to
whether any property or any operations conducted therewith or thereon are in compliance with all
applicable laws, rules and regulations, including without limitation, building codes, zoning
ordinances, or environmental laws. As to (i) the adequacy and legal sufficiency of the description
of any property described in the Transaction Documents, (ii) title to any property described in the
Transaction Documents, (iii) the due recordation, filing, and/or indexing of any Transaction
Documents, and (v) each and any other matter that is insured by the title insurance policy obtained
by purchaser, we understand that purchaser is relying upon such title insurance policy, and all
matters insured by such policy are hereby excepted and excluded from the opinions expressed in this
letter.



We express no opinion with respect to the effect of any law other than the law of the State of
Ohio and the Federal law of the United States.



3. OPINIONS




Based upon and subject to the foregoing and the other qualifications and limitations stated in this
opinion letter, we are of the opinion that:



(a) Based solely on the issuance of a good standing certificate by the Secretary of State of
Ohio, and our review of the Certificates and of the corporate minute books provided to us by the
Seller Parties for each of the Ohio Entities each of Jockey Club, Turf Club and Concessions is a
corporation duly incorporated, validly existing, and in good standing under the laws of the State
of Ohio.



(b) Based on our review of the corporate minute books provided to us by the Seller Parties for
each of the Ohio Entities, each of Jockey Club, Turf Club and Concessions has the requisite
corporate power and authority to execute and deliver, and to perform its obligations under, each of
the Transaction Documents.



(c) Based on our review of the Certificates and of the corporate minute books provided to us
by the Seller Parties for each of the Ohio Entities, the execution, delivery, and performance by
each of Jockey Club, Turf Club and Concessions of each of the Transaction Documents have been duly
authorized by all necessary action of each of Jockey Club, Turf Club and Concessions, including,
without limitation, authorization by each of their respective Boards of Directors and Shareholders.



(d) Based on our review of the corporate minute books provided to us by the Seller Parties for
each of the Ohio Entities, each of Jockey Club and Turf Club has the requisite corporate power and
authority to contribute the racing licenses held by each of Jockey Club and Turf Club,
respectively, and the related pari-mutuel tax abatements to one or more newly-formed limited
liability companies pursuant to the Purchase Agreement.


 


4









 





(e) The contributions by each of Jockey Club and Turf Club of the racing licenses held by each
of Jockey Club and Turf Club, respectively, and the related pari-mutuel tax abatements to one or
more newly-formed limited liability companies have been duly authorized by all necessary corporate
action of each of Jockey Club and Turf Club, including, without limitation, authorization by each
of their respective Boards of Directors and Shareholders.



(f) Each of the Transaction Documents has been duly executed and delivered by Jockey Club,
Turf Club and Concessions.



(g) Each of the Transaction Documents executed by one or more of Jockey Club, Turf Club and
Concessions, and, as to the Seller, assuming the due and valid existence of Seller, and the
authorization, and execution and delivery of the Transaction Documents by the Seller, constitutes
the legal, valid, and binding obligation of each of the Seller Parties that is a party thereto,
enforceable against such Seller Party in accordance with its terms.



(h) None of the execution and delivery by any Ohio Entity of any of the Transaction Documents,
the consummation of the transactions contemplated by the Transaction Documents, or the
contributions by each of Jockey Club and Turf Club of the racing licenses held by each of Jockey
Club and Turf Club, respectively, and the related pari-mutuel tax abatements to one or more
newly-formed limited liability companies violates (i) any provision of the Governing Documents
related to such party, (ii) to our knowledge, any order or judgment applicable to such party, or
(iii) the provisions of any Material Agreement (as defined in the Certificates) to which such party
is a party or any Material Agreement which is otherwise binding on such party or its property.



* * * * * * * * * * * * *




4. QUALIFICATIONS





Our opinions expressed above are qualified with respect to the Transaction Documents follows:



(a) The opinions expressed in paragraph (g) above are subject to the following qualifications:
(i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws or general application affecting creditors’ rights generally, (ii)
enforceability may be limited by general equitable principles, including, without limitation, the
doctrines of good faith, fair dealing, reasonableness and materiality, and the discretion of courts
in applying the remedy of specific performance, injunctions, or other equitable remedies (whether
enforcement is considered in a proceeding at law or in equity), and (iii) no opinion is expressed
as to the enforceability of (A) self-help
provisions, (B) provisions which purport to limit, or permit the alteration or termination of, the
rights of third parties, (C) provisions which purport to establish evidentiary standards, (D)
provisions related to waiver of rights, notices or defenses, notifications or remedies (or the
delay or omission of enforcement thereof), disclaimers of liability, liability limitations with
respect to third parties, release of legal or equitable rights, discharges of defenses, or
liquidated damages, (E) provisions which purport to require payment or reimbursement of attorney’s
fees, collection fees, or litigation expenses of another party, (F) the right of a party to have a
receiver appointed for the premises, or (G) indemnification provisions.


 


5









 





(b) Our opinion regarding enforceability of the Transaction Documents is further subject to
the qualifications that (i) we render no opinion as to the enforceability of any provision of the
Transaction Documents which constitutes a penalty as opposed to reasonable compensatory damages,
and (ii) certain other rights, remedies, waivers, or other provisions of the Transaction Documents
may not be enforceable or specifically enforced but will not interfere with the practical
realization of the principal benefits of the Transaction Documents.



This letter deals only with the specific legal issues it explicitly addresses. Accordingly,
an express opinion concerning a particular legal issue does not address any other matters. An
express opinion includes an implied opinion only if it is both essential to the legal conclusion
reached by the express opinion and, based upon prevailing norms and expectations among experienced
lawyers in the State, reasonable in the circumstances. Further we do not opine as to the effect of
federal or state securities, antitrust, labor, employee benefit, intellectual property,
environmental, tax, criminal or local law.



Only the addresses are entitled to rely upon or assert any legal rights based upon this
letter, and only for the purpose contemplated by the Transaction Documents. The addresses may not
rely on this letter or this firm for any legal or other analysis beyond that set forth in this
letter, such as the broader guidance and counsel that we might provide to the Selling Parties.



This letter speaks only as of its date. We have no obligation to advise the addresses (or any
third party) of changes of law or fact that occur after the date of this letter, regardless of
whether the change my affect the legal analysis, a legal conclusion or an information confirmation
in this letter.



We are licensed to practice in the State of Ohio. The coverage of this letter is limited to
the laws of the state of Ohio and the federal laws of the United States and we do not express an
opinion as to the laws of any other jurisdiction.


 


6









 





This opinion letter is furnished only to Pinnacle and Buyer and is solely for the benefit of
Pinnacle and Buyer in connection with the transactions contemplated by the Transaction
Documents. This opinion is not to be used, circulated, quoted, or otherwise relied upon by any
other person or entity, or for any other purpose.



	 	 	 	 	 
	 	Very truly yours,



GRAYDON HEAD & RITCHEY LLP

 	 
	 	By:  	 	 
	 	 	Gerald F. O’Connell, Jr. 	 
	 	 	General Partner 	 



 


7









 





Exhibit G




LEGAL OPINION — SIDLEY AUSTIN




	 	 	 	 	 	 	 
	

	 	SIDLEY AUSTIN llp

555 WEST FIFTH STREET

LOS ANGELES, CA 90013

(213) 896 6000

(213) 896 6600 FAX

	 	BEIJING

BRUSSELS

CHICAGO

DALLAS

FRANKFURT

GENEVA

HONG KONG

LONDON

LOS ANGELES


FOUNDED 1866
	 	NEW YORK

PALO ALTO

SAN FRANCISCO

SHANGHAI

SINGAPORE

SYDNEY

TOKYO

WASHINGTON, D.C.






SIDLEY DRAFT 11/23/10

SUBJECT TO OPINION COMMITTEE REVIEW




[                    ]




Pinnacle Entertainment, Inc.

8918 Spanish Ridge Avenue

Las Vegas, NV 89148




PNK (Ohio), LLC

8918 Spanish Ridge Avenue

Las Vegas, NV 89148




Ladies and Gentlemen:



We have acted as special counsel to River Downs Investment Company, a California limited
partnership (“Seller”) in connection with the closing under that certain Asset Purchase
Agreement dated as of November [_____], 2010 (the “Agreement”) by and among the Seller, River
Downs Jockey Club, Incorporated, an Ohio corporation (“Jockey Club”), River Downs Turf
Club, Incorporated, an Ohio corporation (“Turf Club”), and Ohio Valley Concessions, Inc.,
an Ohio corporation (“Concessions,” and collectively with Seller, Jockey Club and Turf
Club, the “Seller Parties”), Pinnacle Entertainment Group, Inc. a Delaware corporation
(“Pinnacle”) and PNK (Ohio), LLC (“Buyer”). This letter is being provided pursuant
to Section 7(a)(xv) of the Agreement. Capitalized terms used in this letter that are
defined in the Agreement shall have the respective meanings set forth in the Agreement unless
otherwise defined herein or unless the context clearly requires otherwise.




I.
Documents



In connection with our opinions provided in this letter, we have reviewed copies of the following
documents and instruments (collectively, the “Transaction Documents”):




(i) the Agreement;




(ii) the Bill of Sale from Seller Parties to Buyer dated as of                     , 2010;



(iii) the Assignment and Assumption Agreement between Seller Parties and Buyer dated as of
                    , 2010;


 


 









 










                    

[                    ]




Page 2




(iv) the Escrow Indemnification Agreement to which Seller and Buyer are parties dated as of
                    , 2010; and




(v) the Management Agreement between Concessions and Buyer dated as of                     , 2010.



[We also have reviewed all of the following documents:                      (the “Enabling
Documents”), as well as certain organizational documents of                      (the
“Organizational Documents”)].



II. Assumptions




For purposes of this opinion, we have made, with your consent, and without further inquiry as
to their accuracy or completeness, the following assumptions:




A. All signatures on all documents that we have reviewed or relied upon are genuine,
all natural persons executing relevant documents at the relevant times had the legal
capacity to do so, all documents submitted to us as originals are authentic, all documents
submitted to us as copies conform with the originals, and, except only to the extent
expressly opined upon herein, all persons acting in a representative capacity had the
authority to do so and are acting in accordance with their fiduciary obligations.




B. Without limiting Section II.A. above, we have assumed that all partners of Seller
have taken whatever internal entity procedures as are necessary to authorize them to
execute, deliver and perform their obligations under any agreements they are party to, and
that the persons acting in a representative capacity on behalf of such partners had the
authority to do so and are acting in accordance with their fiduciary obligations.




C. With respect to certain information material to our opinions, with your consent and
without further inquiry, we have relied on the factual representations made by Seller in
the Transaction Documents and in certificates that Seller and its general partner have
delivered to you and to us, and on certificates received from the California Secretary of
State and [                                        ]. Further, with your consent, we have assumed the
accuracy of the information set forth in the afore-mentioned documents, and we have
undertaken no independent investigation or inquiry into the truth, accuracy, completeness,
or any other aspect of any matter referred to in any of such documents, although to our
knowledge none of such documents or the information contained therein is false, inaccurate
or incomplete.


 


 









 










                    

[                    ]




Page 3




III. Opinions




Based upon the foregoing and our review of such other documents and matters of law as we deem
relevant, and subject to the assumptions, limitations, qualifications and exceptions herein
contained, we are of the opinion that:




1. Seller is a duly formed limited partnership and is existing in good standing under the
laws of the State of California.




2. Seller has the limited partnership power and authority to execute and deliver, and to
perform its obligations under, each of the Transaction Documents.




3. The execution, delivery, and performance by Seller of each of the Transaction Documents
have been duly authorized by all necessary limited partnership action on the part of the
partners of Seller.




4. Each of the Transaction Documents has been duly executed and delivered by Seller.



IV. Limitations




In addition to the limitations and qualifications expressed elsewhere herein, each of the
opinions rendered herein is subject to the following limitations and qualifications:



A. Any opinion or statement herein which is expressed to be “to our knowledge” or is otherwise
qualified by words of like import means that none of the lawyers who have given substantive
attention to the transaction in which the Transaction Documents have been executed and delivered
has any current conscious awareness of any facts or information contrary to such opinion or
statement. With respect to such matters, such person, with your express permission and consent,
has not undertaken any other investigation or inquiry of other lawyers practicing law with this
firm, or any review of files maintained by this firm, or any inquiry of officers or employees of
Seller or any other Seller Party except as set forth in the Enabling Documents. The reference to
“conscious awareness” in this Paragraph has the meaning given that phrase in the Third-Party Legal
Opinion Report, Including the Legal Opinion Accord, of the Section of Business Law, American Bar
Association, 47 Bus. Law. 167, 192 (1991).


 


 









 










                    

[                    ]




Page 4




B. Our opinion is limited solely to matters of law under United States federal law, and the
internal laws of the States of California, as those laws are in effect as of the date hereof. We
express no opinion as to the laws of any other jurisdiction, including without limitation (i) those
laws addressed in the separate opinion from Graydon Head & Ritchey LLP delivered to you in
connection with the Agreement, and (ii) any ordinances, regulations or practices of any county,
city or other government agency or body within the State of California or elsewhere.



C. We express no opinion as to any circumstances or events subsequent to the issuance of this
letter.



D. Our opinions expressed herein are subject to and may be limited by the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws and court decisions of general
application (including, without limitation, laws relating to fraudulent conveyances and
preferences) and other legal or equitable principles affecting the enforcement of creditors’ rights
generally.



The opinions expressed herein are being delivered to you in connection with the execution and
delivery of the Transaction Documents. This opinion letter is not intended to be employed in
respect of any other transaction and is being delivered on the understanding that neither this
letter nor its contents may be published, communicated or otherwise made available in whole or in
part to any person or entity without, in each instance, our specific prior written
consent. Notwithstanding the foregoing, copies of this letter may be furnished to Pinnacle’s
and Buyer’s successors and assigns and their counsel and advisors, provided that no such successor,
assign, or party shall have any greater rights than Pinnacle and Buyer may have under this letter.
The opinions expressed herein speak as of the date hereof, and we assume no obligation to advise
you of any changes of law or fact that may occur after the date thereof, notwithstanding that such
changes may affect the legal analysis or conclusions contained herein.



Sidley Austin LLP





 


 











 




Exhibit 4.2




MANAGEMENT AGREEMENT




THIS AGREEMENT is made as of this                      day of                     , 2010 (the “Closing Date”), by
and between OHIO VALLEY CONCESSIONS INC., d/b/a River Downs Racetrack (“Licensee”), and PNK (OHIO)
LLC (“Applicant”). Reference is made herein to that certain Asset Purchase Agreement dated as of
November
 _____, 2010 to which Applicant and Licensee are parties (the “Purchase Agreement”), the
terms and conditions of which are incorporated herein by reference.



RECITALS:




WHEREAS, Licensee is selling to Applicant, and Applicant is purchasing from Licensee, certain
personal property used in the operation of the liquor business operated by Licensee (the “Liquor
Business”) at 6301 Kellogg Avenue, Anderson Township, Hamilton County, Ohio 45230 (the “Premises”),
according to the terms set forth in the Purchase Agreement;



WHEREAS, Licensee is currently the holder of D-1, D-2, D-3 and D-6 Permit No. 6522996,
including certain concession stand permits Nos. 65229960003; 6522996000 and 65229960005
(collectively referred to as the “Permit”) issued by the Ohio Department of Commerce, Division of
Liquor Control (“ODLC”) for the sale of alcoholic beverages on the Premises;



WHEREAS, Applicant has or will be filing an application for approval by ODLC for transfer of
Licensee’s Permit to Applicant (the “Transfer Application”); and



WHEREAS, the parties hereto desire to set forth their rights and obligations with respect to
the use of the Permit by Applicant, pending ODLC’s approval of the Transfer Application.




NOW, THEREFORE, the parties hereby agree as follows:



1. APPOINTMENT. On the terms and subject to the conditions hereinafter set forth Licensee
hereby appoints Applicant to take charge of and operate all aspects of the Liquor Business.
Applicant hereby accepts such appointment.



2. TERM. The term of this Agreement shall commence on the Closing Date, and shall remain in
force until the date on which the Permit is transferred to Applicant by the ODLC or on which the
ODLC gives a final denial of such transfer, unless terminated at an earlier date as provided
herein.


 


 









 






3. APPLICANT’S DUTIES. During the term of this Agreement, Applicant shall:




(a) keep accurate accounting records showing all funds received and
expenditures made or incurred in connection with the operation of the Liquor Business, and make all
tax and other governmental filings with respect thereto under Licensee’s account numbers;



(b) keep such records and underlying receipts for at least three (3) years after the period
covered;



(c) conduct the Liquor Business in a legal and proper manner, abiding by all laws, ordinances,
rules, regulations, and directives of any governmental unit having jurisdiction over the Liquor
Business, including, without limitation, the ODLC;



(d) maintain and pay premiums for comprehensive bodily injury, liquor liability and property
damage insurance in amounts sufficient to provide reasonable and adequate protection of both
Applicant and Licensee against liability which may arise in connection with the Liquor Business,
but in amounts no less than currently maintained by Licensee;



(e) maintain and pay premiums for unemployment and worker’s compensation insurance for all
employees working in the Liquor Business; and



(f) timely pay all income and sales taxes, employees’ salaries, withholding taxes, and all
other expenses relating to the operation of the Liquor Business.



4. LICENSEE’S DUTIES. During the term of this Agreement, Licensee shall take any and all
steps at the direction of and reasonably required by Applicant to facilitate the continued validity
of the Permit, including, without limitation, renewing the Permit if it expires during the term of
this Agreement, and to facilitate the transfer of the Permit to Applicant, including the voluntary
relinquishment of Licensee’s Permit at such time as the ODLC approves the transfer and the
provision of any documentation requested by the ODLC.



5. MANAGEMENT FEE. In consideration of the services to be rendered by Applicant to Licensee
hereunder, Applicant shall be entitled to retain all net income produced from the Liquor Business
upon continued satisfaction of Applicant’s duties under Section 3.



6. COST OF TRANSFER APPLICATION. Applicant has paid and is responsible for the filing fee for
the Transfer Application.



7. DOCUMENT DELIVERY. Each party shall deliver within five (5) business days of receipt of
such information and documents to the other party all documents and information that are received
by each party with respect to the Permit.



8. EVIDENCE OF INSURANCE. During the term of this Agreement, Applicant shall name Licensee as
an additional insured on all policies of insurance which Applicant obtains for its operation of the
Liquor Business. Upon request Applicant shall furnish to Licensee, on or before the Closing Date,
a certificate from the insurer with respect to such policies and copies of all such policies.


 


2









 





9. NO PARTNERSHIP OR JOINT VENTURE OR AGENCY. Applicant and Licensee are not partners, joint
venturers, or agents and nothing herein shall be so construed. Applicant shall perform its duties
hereunder solely as an independent contractor of Licensee.




10. INDEMNIFICATION.



(a) Licensee hereby agrees to compensate, indemnify and save and hold Applicant harmless from
and against any claim, liability, loss, damage, cost, expense or other deficiency, including but
not limited to, reasonable attorneys’ fees and other legal costs and expenses in any way arising
out of, resulting from, or relating to: 1) operation of the Liquor Business prior to the Closing
(as defined in the Purchase Agreement); 2) Licensee’s breach of any representation or warranty made
by Licensee herein; or 3) failure of Licensee to perform any of its obligations as set forth
herein.



(b) Applicant hereby agrees to compensate, indemnify, and save and hold Licensee harmless from
and against any claim, liability, loss, damage, cost, expense or other deficiency, including but
not limited to, reasonable attorneys’ fees and other legal costs and expenses in any way arising
out of, resulting from, or relating to 1) Applicant’s breach of any representation or warranty
made by Applicant herein; 2) failure of Applicant to perform any of its obligations as set forth
herein; or 3) Applicant’s operation of the Liquor Business after the Closing.



11. AMENDMENTS; BINDING EFFECT. This Agreement shall not be modified or terminated except by
an instrument in writing signed by both parties hereto or their respective successors or assigns,
and shall be binding on and inure to the benefit of the parties hereto and their respective
successors and assigns.



12. COUNTERPARTS. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same instrument.


 


3









 





IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	LICENSEE: OHIO VALLEY
CONCESSIONS, INC.,

dba RIVER DOWNS RACETRACK

 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	 	 
	 	APPLICANT: PNK (OHIO), LLC

 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 



 


4









 





ACKNOWLEDGMENT




The undersigned, being the current owner of the Premises, hereby acknowledges and consents to
the foregoing.



RIVER DOWNS INVESTMENT COMPANY

a California limited partnership



	 	 	 	 	 	 	 
	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Print Name:	 	 	 	 
	 

	 	 	 	 

	 	 





 


5









 





Schedule 1.1(g)




Material Contracts




Payment in 2010 thru 11/9/10




Vendors with written
or oral contracts
over $25,000



	 	 	 	 	 	 	 
	America TAB (Churchill Downs)
	 	Deposits to Internet Accounts	 	$	63,394	 
	CBT, LLC
	 	Video Services	 	$	510,225	 
	Daily Racing Form
	 	Racing Forms	 	$	126,058	 
	Daily Racing Form
	 	Racing Programs	 	$	81,597	 
	Daily Racing Form
	 	Live Programs	 	$	36,173	 
	Duke Energy
	 	Gas & Electric Delivery	 	$	213,944	 
	First Energy
	 	Electric Supplier	 	$	104,765	 
	Greater Cinti Water Works
	 	Water	 	$	118,385	 
	Hardy Trucking
	 	Manure Removal	 	$	46,936	 
	HBPA
	 	Horsemen’s Fees & Insurance	 	$	24,313	 
	Hudepohl Construction
	 	Kitchen Contractor	 	$	33,879	 
	Incompass
	 	Program Data	 	$	32,125	 
	Integrys Energy*
	 	Natural Gas	 	$	24,003	 
	Roberts Communication
	 	Decoder Rental	 	$	62,671	 
	Roberts Communication
	 	Uplink Video	 	$	31,800	 
	Dinsmore & Fries
	 	Lobbying	 	$	5,000/mo	 
	Tim Wykoff
	 	Turf and Landscape Maint	 	$	69,770	 
	Xerox Corp
	 	Copier Rental	 	$	21,645	 






Vendors with written
or oral contracts
under $25,000



	 	 	 	 	 	 	 
	American Teletimer Corp
	 	Photo Finish	 	$	13,000	 
	Auxier Gas
	 	Propane	 	$	20,824	 
	John B. Battaglia
	 	Morning Line Services	 	$	6,760	 
	Brink’s
	 	Armored Car	 	$	1,763	 
	John Capurro, MD
	 	Track Physician	 	$	10,400	 
	Race Track Chaplaincy
	 	Track Chaplain	 	$	2,500	 
	CRC & Assoc
	 	C/H Kitchen Engineer	 	$	4,355	 
	Equibase Company
	 	Program Royalties	 	$	20,578	 
	Fire Extinguisher Services
	 	Extinguisher & Supression	 	$	4,312	 
	Jones Fish Hatcheries
	 	Pond Maintenance	 	$	3,362	 
	Kim Jordan
	 	Outrider Horse Maint	 	$	2,820	 
	Kone Inc
	 	Elevator/Escalator Maint	 	$	12,772	 
	T.L. Krieg Offset
	 	Print Condition Books	 	$	14,970	 
	Cincinnati Light
	 	Casual Labor	 	$	11,118	 
	Nurse Staffing of Cincinnati
	 	Contract Nurses	 	$	7,686	 
	Pitney Bowes
	 	Postage Machine Contract	 	$	1,926	 
	Plant Trolly
	 	Foilage Care Offices	 	$	937	 
	Preferred Fire Protection
	 	Maint Sprinkler System	 	$	2,478	 
	Rincon Vitova Insectaries
	 	Fly Control	 	$	2,588	 






 


 









 





	 	 	 	 	 	 	 
	Roberts Communication
	 	Frame Relay	 	$	13,000	 
	Rumpke
	 	Trash Removal Contract	 	$	5,224	 
	Rumpke (Concessions)
	 	Trash Removal	 	$	300/month	 
	Sport Tech
	 	Interface Fees	 	$	12,322	 
	John Shipley
	 	Dead Horse Removal	 	$	3,250	 
	Sprint PCS
	 	Cell Phone	 	$	3,200	 
	Stanley Convergent Security
	 	Fire and Alarm Monitoring	 	$	2,262	 
	Bill Sweeney
	 	Furnish Straw	 	$	5,732	 
	TW Telecom
	 	Telephone & Internet	 	$	21,023	 
	TRPB
	 	Tattooing Horses	 	$	6,868	 
	Voice Tech
	 	Fax Services	 	$	3,066	 
	NYRA
	 	Decoder Rental	 	$	250/mo	 
	Woodbine Entertainment
	 	Decoder Rental	 	$	1,050	 
	Paul Wykoff
	 	HVAC Maint	 	$	6,611	 
	Xpedx
	 	Maintenance Supplies	 	$	15,105	 
	Jack York
	 	Outrider Horse Maint	 	$	3,000	 
	 
	 	 	 	 	 	 
	Coca-Cola
	 	Race Sponsorship/Supplier Agreement	 	 	 	 








	 	 	 
	*	 	With respect to this contract, Seller makes no representation that the description of such
contract provided to Buyer and Pinnacle includes all material terms, but rather represents
that such description accurately describes the following terms: (i) the applicable rate, and
(ii) that the contract is cancelable.



 


 









 









Schedule 1.2(j)




Excluded Assets





	1.	 	Seller Parties’ MAS90 software and related data and records. To the extent permitted
by applicable license agreements, Buyer to allow Seller Parties the opportunity to retrieve
software and related data and records from Seller Parties’ computer system post-Closing.






	2.	 	Concessions’ Business Works software and related data and records. To the extent
permitted by applicable license agreements, Buyer to allow Concessions the opportunity to
retrieve software and related data and records from Seller Parties’ and/or Concessions’
computer system post-Closing.






	3.	 	2005 Ford Explorer owned by Concessions.




 


 









 










Schedule 1.2(l)




Excluded Deposits





	1.	 	Racing Commission Tax Deposit in the approximate amount of $8,100.
	 
	2.	 	Workers’ Compensation Deposit for River Downs Investment Company in the
approximate amount of $1000.
	 
	3.	 	Ohio Valley Concessions, Inc. deposit with the Lottery Commission.
	 
	4.	 	Ohio Valley Concessions, Inc. prepaid monthly sales tax deposits.
	 
	5.	 	Ohio Valley Concessions, Inc. deposits for beer kegs in stock.
	 
	6.	 	Workers’ Compensation Deposit for Ohio Valley Concessions, Inc. in the approximate
amount of $223.36.




 


 









 





Schedule A.3.




Consents





	1.	 	OSRC consent to the assignment and/or transfer of the Racing Licenses to the LLCs and
the subsequent purchase of the membership interests of the LLCs by Buyer.
	 
	2.	 	Consent to the assignment and/or transfer of the liquor permits issued to Concessions to
Buyer from the Ohio Department of Liquor Control.
	 
	3.	 	Any consent or approval required under the CAFO Regulations.
	 
	4.	 	Any consent or approval required by the Ohio Lottery Commission with respect to Buyer
being an Ohio Lottery Retailer License;






 


 









 







Schedule A.4.




Title to Assets





	1.	 	All matters disclosed in the Commitment For Title Insurance issued by Commonwealth Land Title
Insurance Company with an Effective Date of October 19, 2010 at 6:59 a.m., Commitment No.:
10-001575/12287300
	 
	2.	 	“River Downs” is an unregistered trade name.
	 
	3.	 	Domain name riverdowns.com registered with Network Solutions, LLC.




 


 









 










Schedule A.5.




Exceptions 




None.


 


 









 





Schedule A.6.




Legal Proceedings





	1.	 	U.S. Equal Employment Opportunity Commission Notice of Charge of Discrimination of Stephen B.
Scardina dated February 1, 2010, as amended February 26, 2010.






	2.	 	Defendant in the following case: In re Cloverleaf Enterprises v. Maryland Enterprises,
Chapter 11 Bankruptcy case filed in Maryland Bankruptcy Court, Greenbelt Division, Case No.
09-20056.






	3.	 	Defendant in the following case: Horsemen’s Benevolent & Protective Association — Ohio
Division, Inc. v. Marc Dann, et al, filed in the United States Court of Appeal for the Sixth
Circuit, Court of Appeals Docket # 10-3511.




 


 









 










Schedule A.7.




Description of property




	 	 	 
	Hamilton County Auditor’s	 	 
	Parcel Number	 	Property Address
	 
	 	 
	500-0460-0033

	 	6480 Kellogg Avenue
	500-0460-0017

	 	200 Kellogg Avenue
	500-0460-0058

	 	205 Kellogg Avenue
	500-0460-0048

	 	201 Kellogg Avenue
	500-0460-0018

	 	6382 Kellogg Avenue
	500-0460-0019

	 	6452 Kellogg Avenue
	500-0460-0021

	 	6482 Kellogg Avenue
	500-0460-0023

	 	6472 Kellogg Avenue
	500-0460-0027

	 	6301 Kellogg Avenue
	500-0460-0028

	 	6475 Kellogg Avenue
	500-0460-0029

	 	6539 Kellogg Avenue
	500-0460-0030

	 	Kellogg Road
	500-0460-0031

	 	6446 Kellogg Avenue
	500-0460-0034

	 	6444 Kellogg Avenue
	500-0460-0043

	 	6432 Kellogg Avenue
	500-0460-0047

	 	6448 Kellogg Avenue
	500-0460-0053

	 	6456 Kellogg Avenue






 


 









 





Schedule B.5.




Governmental Consents




Pinnacle will file a form 8-K with the U.S. Securities and Exchange Commission.