Exhibit 10.4
SETTLEMENT AGREEMENT AND
MUTUAL RELEASE
This Settlement Agreement and Mutual
Release (“Agreement”) is made by and between Pinnacle
Entertainment, Inc. (“Pinnacle”) on the one hand, and
Allianz Global Risks US Insurance Company (“Allianz”)
on the other hand. Pinnacle and Allianz shall be referred to herein
individually as a “Party” and collectively as the
“Parties.” The “Effective Date” of this
Agreement is May 5, 2008.
RECITALS
WHEREAS, Allianz issued to Pinnacle
a policy of excess insurance CLP30005890 (the “Allianz
Policy”) which insured Pinnacle for the period from
April 1, 2005 to April 1, 2006. The Allianz Policy had a
limit of $50 million excess of $100 million; and
WHEREAS, on or about August 29,
2005, Hurricane Katrina made landfall in an area between eastern
Louisiana and western Mississippi, causing damage to
Pinnacle’s Casino Magic hotel and casino, which was located
in Biloxi, Mississippi (“Casino Magic”), as well as to
certain other Pinnacle properties in Biloxi and to its Boomtown
Casino location in Harvey, Louisiana (“Boomtown”);
and
WHEREAS, Pinnacle sought coverage
under the Allianz Policy and other policies in its first-party
property insurance program for the 2005-2006 policy period for the
losses it sustained that related to or arose out of damage
to
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Casino Magic, Boomtown, and other properties,
caused by Hurricane Katrina, including for property damage and
business income loss (the “Insurance Claim”);
and
WHEREAS, on or about August 1,
2006, Pinnacle filed a lawsuit in the United States District Court
for the District of Nevada (the “Court”), entitled
Pinnacle Entertainment, Inc. v. Allianz Global Risks US
Insurance Company, et al. , Case
No. 2:06-cv-00935-BES-PAL, alleging, inter alia ,
breach of contract, bad faith, and breach of statutory duties in
violation of Nevada Revised Statutes Section 686A.310, and
seeking declaratory relief against Allianz, Arch Specialty
Insurance Company (“Arch”) and RSUI Indemnity Company
(“RSUI”) (the “Coverage Action”);
and
WHEREAS, on or about
February 22, 2007, Allianz paid to Pinnacle a $5 million
advance under the Allianz Policy for the Insurance Claim (the
“February 22, 2007 Payment”); and
WHEREAS, Pinnacle and Allianz desire
to settle any and all disputes between them which they now have or
may later have regarding the Coverage Action and the Insurance
Claim, including any claim, demand, or cause of action related to
the loss caused by Hurricane Katrina that was made or could have
been made in the Coverage Action and/or the Insurance
Claim;
NOW, THEREFORE, in consideration of
the mutual promises, covenants, obligations, agreements, and other
undertakings set forth herein,
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and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Parties agree by and among themselves, each with the other, as
follows:
AGREEMENT
1. PAYMENT.
1.1. Payment By Allianz.
Within thirty (30) days of the execution of this Agreement,
Allianz shall wire Forty-Eight Million Dollars
($48,000,000.00) to Pinnacle pursuant to the wire instructions
attached hereto as Exhibit 1. The foregoing payment shall be
referred to herein as the “Settlement Payment.” None of
the Settlement Payment is for bad faith damages claimed by
Pinnacle.
1.2. Allocation. The first
fifty million dollars ($50,000,000) of the combined
February 22, 2007 Payment and the Settlement Payment shall be
allocated to pay for covered loss sought by Pinnacle under the
Allianz Policy for the Insurance Claim. The remaining three million
dollars ($3,000,000) of the combined February 22, 2007 Payment
and the Settlement Payment shall be applied as a disputed interest
payment on the Insurance Claim. Allianz and Pinnacle hereby
stipulate and agree that the February 22, 2007 Payment and the
Settlement Payment exhaust the limit of liability under the Allianz
Policy applicable to the Insurance Claim.
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2. RELEASES.
2.1. Release by Pinnacle.
Upon Pinnacle’s receipt and successful deposit of the
Settlement Payment, but subject to the Court’s entry of the
stipulated dismissal referenced in Section 3.1, Pinnacle and
each of its parents, subsidiaries, predecessors, successors and
assigns (the “Pinnacle Releasors”), do forever release
Allianz, and each of its past, present and future businesses,
affiliates, parents, subsidiaries, joint venturers, assigns,
trustees, owners, principals, officers, directors, shareholders,
agents, employees, independent contractors, suppliers, reinsurers
(but only to the extent such reinsurer is a reinsurer of Allianz),
attorneys, and representatives, and each of them (collectively, the
“Allianz Releasees”), of and from any and all
liabilities, claims, defenses, causes of action, obligations,
duties, penalties, attorneys’ fees, costs, damages, or
injuries of any nature whatsoever, whether based on contract, tort,
statute or other legal or equitable theory of recovery, including
any claim for contribution, indemnity or subrogation, whether
contingent or liquidated, which the Pinnacle Releasors have
relating to or arising out of: (a) the Insurance Claim;
(b) the Coverage Action, including, without limitation, any
claims for breach of the Allianz Policy, breach of any implied
covenant of good faith and fair dealing, bad faith, violations of
Nevada Revised Statutes Section 686A.310, and/or punitive,
exemplary and/or extra-contractual damages or penalties; and/or
(c) the February 22, 2007 Payment.
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Notwithstanding anything else in this Agreement,
the Pinnacle Releasors are not releasing the Allianz Releasees, or
any of them, from any duties or obligations under this Agreement.
Further, the Pinnacle Releasors are not releasing any other insurer
or reinsurer, including without limitation, RSUI. The Pinnacle
Releasors do not release Willis of Nevada, Inc. or any of its
respective former or present affiliate companies, their parents,
subsidiaries, divisions and merged or acquired companies
(collectively, “Willis”). Notwithstanding anything else
in this Agreement, the Pinnacle Releasors do not release any of
Allianz’s joint venturers, assigns, trustees, owners,
principals, officers, directors, shareholders, agents, employees,
independent contractors, suppliers, reinsurers, attorneys, or
representatives, or any of them, for liability arising out of their
actions on behalf of any person or entity other than
Allianz.
2.2. Release by Allianz. In
exchange for the foregoing release and other valuable
consideration, Allianz, and each of its parents, subsidiaries,
predecessors, successors and assigns (the “Allianz
Releasors”), upon Pinnacle’s receipt and successful
deposit of the Settlement Payment, but subject to the Court’s
entry of the stipulated dismissal referenced in Section 3.1,
do forever release Pinnacle and each of its past, present and
future businesses, affiliates, parents, subsidiaries, joint
venturers, assigns, trustees, owners, principals, officers,
directors, shareholders, agents, employees,
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independent contractors, suppliers, insurers,
reinsurers (except to the extent such reinsurer is also a reinsurer
of Allianz on the Allianz Policy), attorneys, and representatives,
and each of them (collectively, the “Pinnacle
Releasees”), of and from any and all liabilities, claims,
defenses, causes of action, obligations, duties, penalties,
attorneys’ fees, costs, damages, or injuries of any nature
whatsoever, whether based on contract, tort, statute or other legal
or equitable theory of recovery, including any claim for
contribution, indemnity or subrogation, whether contingent or
liquidated, which the Allianz Releasors have relating to or arising
out of: (a) the Insurance Claim; (b) the Coverage Action,
including, without limitation, any claims for breach of the Allianz
Policy, breach of any implied covenant of good faith and fair
dealing, bad faith and/or any claims relating to the tender or
investigation of the Insu
