Exhibit 10.7
PINNACLE ENTERTAINMENT, INC.
DIRECTOR HEALTH AND MEDICAL INSURANCE PLAN
Effective January 1, 2011
 
1.
Purposes of the Plan. The purposes of this Plan are to attract and retain
qualified individuals to serve as members of the Company's Board of Directors
and to provide them and their Dependents with health and medical insurance
coverage as additional incentive for such service.

2.
Definitions. For the purposes of this Plan, the following terms will have the
following meanings:

(a)“Board” means the Board of Directors of the Company.
(b)“Change of Control” means
(i)The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A)
the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this clause (i), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company;
(ii) any acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
subsidiary; or (iv) any acquisition by any corporation pursuant to a transaction
that complies with clauses (b)(iii)(A); (iii)(B) and (iii)(C);
(ii)Any time at which individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;
(iii)Consummation of a reorganization, merger, consolidation or a sale or other
disposition of all or substantially all of the assets of the Company (each, a
“Business Combination”), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(iv)Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
(c)“COBRA Coverage” means group health care continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and which is
codified at Section 4980B of the Code and Sections 601 through 608 of ERISA or
other coverage provided by the Company under similar terms and conditions.
(d)“Code” means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
(e)“Company” means Pinnacle Entertainment, Inc., a Delaware corporation, and any
successor as

 

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provided in Section 7(a).
(f)“Covered Period” means the period during which Plan benefits will be provided
to a Plan Participant, consisting of-
(i)the period of a Director's active service on the Board; and
(ii)in the case of an Existing Director and his or her Dependents, the specified
period following the earlier of the date of Termination of the Existing Director
or the date of a Change in Control:
(A)as to the Existing Director-
(1)who has attained age 70 or older on the date of such event, five years;
(2)who has not yet attained age 70 on the date of such event, one year for every
two years that the Director served on the Board, up to a maximum of five years
of Plan coverage;
(B)as to a Spouse of the Existing Director, the Existing Director's Covered
Period or, in the event of the Existing Director's death, the period that would
have been calculated for the Existing Director had he or she survived, in either
case ending on the last day of such period, or if earlier, the date on which (1)
the Spouse's divorce from the Existing Director is final, or (2) the Spouse
remarries following the death of the Existing Director; and
(C)as to a Dependent Child of the Existing Director, the Existing Director's
Covered Period or, in the event of the Existing Director's death, the period
that would have been calculated for the Existing Director had he or she
survived, in either case ending on the last day of such period, or if earlier,
the date on which such child no longer qualifies as a Dependent Child.
(g)“Dependent Child” or “Dependent Children” means a child or children of the
Director who has or have been born prior to or during the time Director is
actively serving as a Director; provided, however, that such child or children
shall cease to be a Dependent Child or Dependent Children on the date on which
they reach their twenty-sixth birthday, or in the case of a child who is
physically or mentally disabled, the date on which such child is no longer
eligible for coverage as a dependent under the applicable Insurance Plan, if
later.
(h)“Dependent” means the Spouse and one or more Dependent Children of a
Director.
(i)“Director” means a member or former member of the Board who served on the
Board on or after January 1, 2011, including an Existing Director as well as an
individual who becomes a member of the Board after January 1, 2011.
(j)“Existing Director” means a member or former member of the Board who was
actively serving on the Board as of January 1, 2011.
(k)“Eligible Medical Expenses” means copayments, coinsurance and deductibles.
(l)“General Health Plan” means the Company's health and medical insurance plan
(whether comprised of one or more component plans) that is generally applicable
to its employees, as such plans may be amended from time to time.
(m)“Insurance Plans” means the health and medical insurance plans of the
Company, including the General Health Plan (whether or not under insurance
policies) in effect from time to time covering its employees during the Covered
Period, including any successor plan; provided, however, that if at any time
during the Covered Period, the Company does not have any such plans, it shall
secure, at the Company's expense, health and medical insurance coverage for Plan
Participants from an insurance carrier rated A or higher providing health and
medical coverage in the aggregate no less favorable than that provided as of the
date the Plan Participants become entitled to medical and health insurance
coverage hereunder.
(n)“Plan” means this Director Health and Medical Insurance Plan, as it may be
amended from time to time.
(o)“Plan Participant” means each Director and each Dependent during his or her
Covered Period.
(p)“Section 409A” means section 409A of the Code and the regulations and
guidance promulgated thereunder.
(q)“Spouse” means and shall be limited to the Director's spouse during the
Director's active service and at the date of the Director's Termination.
(r)“Termination” means the date on which a Director no longer serves on the
Board for any reason, including but not limited to death, retirement, or
resignation or removal from the Board, or is not nominated for re-election for
any reason. In each instance, Termination shall satisfy the meaning of
“separation from service” under Section 409A.
3.
Plan Coverage.

a.During Active Service. During a Director's active service on the Board, the
Director and his or her Dependents shall participate in the Insurance Plans,
under the terms and conditions of the Insurance Plans, and also receive the
reimbursement benefits described in Section 4.
b.Following Termination.
i.Beginning on the date of Termination, a Director and his or her Dependents
shall have the

 

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right to elect COBRA Coverage under the Insurance Plans at their own cost for
the available period of COBRA Coverage.
ii.During an Existing Director's Covered Period following Termination, the
Existing Director and his or her Dependents shall participate in the Insurance
Plans, under the terms and conditions of the Insurance Plans, and receive the
reimbursement benefits described in Section 4. Such coverage shall be
coordinated with the COBRA Coverage period pursuant to Section 5.
c.Following a Change of Control.
i.Following a Change of Control, a Director and his or her Dependents shall have
the right to elect COBRA Coverage under the Insurance Plans at their own cost
for the available period of COBRA Coverage.
ii.During an Existing Director's Covered Period following a Change in Control,
the Existing Director and his or her Dependents shall-
A.participate in the Insurance Plans, under the terms and conditions of the
Insurance Plans, provided, however that the Company shall use its best efforts
to cause such coverage to be provided under insurance policies written by third
party insurance carriers that is in the aggregate no less favorable than the
coverage provided as of the date the Existing Director and his or her Dependents
become entitled to coverage under the Plan, and that the Company shall provide
copies of such policies to such Plan Participants; and
B.receive the reimbursement benefits described in Section 4.
4.
Reimbursement Benefits.

a.Reimbursement of Certain Eligible Medical Expenses. Each calendar year, the
Company shall reimburse, or pay service providers on behalf of, each Director
all Eligible Medical Expenses incurred for out-of-network services received by
any Plan Participant during the Covered Period; provided however, that each
Director shall be responsible for the first $5,000 of Eligible Medical Expenses
incurred in the aggregate for the Director and his or her Dependents each
calendar year.
b.Timing of Reimbursement. The payment or reimbursement by the Company of any
reimbursable Eligible Medical Expense shall be made by December 31 of the
calendar year following the calendar year in which such Eligible Medical Expense
was incurred.
c.Terms of Reimbursement. Any amount reimbursed in one taxable year shall not
affect the expenses eligible for reimbursement in any other taxable year. The
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit. The cost of Plan benefits shall be borne by the
Company and paid with general assets of the Company. Except as provided herein,
Plan Participants shall be responsible for all taxes, including any imputed
income taxes, related to coverage under the Plan and any Insurance Plan.
d.Indemnification. If for any reason the Company shall fail to maintain any
Insurance Plan while this Plan exists, the Company shall indemnify and hold Plan
Participants harmless from all cost, loss, liability or expense that is caused
by such failure and would otherwise be covered by an Insurance Plan. Any payment
or reimbursement of benefits under the Insurance Plans, or paid by the Company
by way of indemnification for failure to maintain any Insurance Plan, that is
taxable to a Plan Participant shall be made by December 31 of the calendar year
following the calendar year in which the Plan Participant incurred the expense.
5.
Concurrent with COBRA Coverage. COBRA Coverage shall run concurrently with
coverage under the Plan following Termination. The provision of Plan benefits
for any period of time following a Director's Termination shall not extend the
period for which the Director and/or his or her Dependents are eligible for
COBRA Coverage. At the end of the Covered Period, each Plan Participant shall be
eligible to purchase COBRA Coverage at the full rate for the COBRA Coverage
period, if any, that remains following the termination of Plan coverage;
provided that all required premiums are timely paid. It shall be the
responsibility of qualified beneficiaries to keep the monthly premium payments
current to ensure COBRA Coverage does not lapse.

6.
Insurance Offset. If at any time during the Covered Period a Plan Participant is
insured under other health or medical plans or under Medicare, then the
Insurance Plans shall provide supplemental coverage to the extent permitted by
law to the extent that such other plans do not provide full coverage for any
given claim. The Plan Participant shall notify the Company's human resources
office upon request of his or her coverage under any such other plans or
Medicare but, except as provided herein shall have no obligation to seek any
such coverage. If eligible for Medicare coverage, a Plan Participant shall
enroll in Medicare and remain enrolled through the Covered Period.

7.
Miscellaneous.

a.Successors and Assigns. This Plan will be binding upon and inure to the
benefit of the parties and, in the case of the Company, its successors and
assigns. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
the Company's obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place, but such successor's obligation to do so shall not be dependent
on such express assumption. “Company” means the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid that assumes and
agrees to perform

 

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this agreement by operation of law or otherwise.
b.Governing Law/Jurisdiction. This Plan and the rights and obligations of the
Company and the Plan Participants shall be governed by and construed in
accordance with the laws of the State of Delaware in all respects, including all
matters of construction, validity and performance, without regard to the
conflict of law rules of such state.
c.Modification and Waiver. No provisions of this Plan will be amended, waived or
modified except by an instrument in writing and no such amendment, waiver or
modification shall adversely affect any rights of Plan Participants to health
and medical insurance coverage as provided for herein.
d.Attorneys' Fees. Any dispute, controversy or claim arising out of this Plan or
the rights and obligations of the Company and any Plan Participant shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and judgment on the award rendered by the
arbitrators may be entered into any court having jurisdiction. If any
arbitration is instituted to remedy, prevent or obtain relief from a default in
the performance by the Company or a Plan Participant of its obligations under
this Plan, or to recover damages from a breach of a representation or warranty,
the prevailing party will recover all of such party's attorneys' fees incurred
in each and every such arbitration, including any and all appeals or petitions
therefrom. As used in this section, attorneys' fees means the full and actual
costs of any legal services actually performed in connection with the matters
involved calculated on the basis of the usual fee charged by the attorney
performing such services and will not be limited to “reasonable attorneys' fees”
as defined in any statute or rule of court.
e.Claims Procedure. The claims procedure for benefits under this Plan shall be
the Claims Procedure under the applicable Insurance Plan.
f.Required Delay For Certain Deferred Compensation and Section 409A. In the
event that any compensation with respect to the Director's Termination is
“deferred compensation” within the meaning of Section 409A, the stock of the
Company or any affiliate is publicly traded on an established securities market
or otherwise, and the Director is determined to be a “specified employee,” as
defined in Code Section 409A(a)(2)(B)(i), payment of such compensation shall be
delayed as required by Section 409A. Such delay shall last six months from the
date of the Director's Termination, except in the even of the Director's death.
Within 30 days following the end of such six-month period, or, if earlier, the
Director's death, the Company will make a catch-up payment to the Director equal
to the total amount of such payments that would have been made during the
six-month period but for this Section 7(f). Wherever payments under this Plan
are to be made in installments, each such installment shall be deemed to be a
separate payment for purposes of Section 409A.
g.Notices. Any notice, request, demand, instruction or other communication to be
given to the Company or a Plan Participant shall be in writing and shall be hand
delivered or sent by Federal Express or comparable overnight courier or mail
service, or mailed by U.S. or certified mail, return receipt requested, postage
prepaid, to such person at the most current address in the Company's records.
h.Third Party Beneficiaries. Each Plan Participant is an express beneficiary
hereunder and may enforce his or her rights under the Plan. The Company shall
provide each Director and each Plan Participant notice of his or her
participation in the Plan, but such participation shall not be dependent upon
such notification.
i.Taxation. The Company makes no commitment or guarantee that any amounts paid
to or for the benefit of a Plan Participant will be excludable from gross income
for federal or state income tax purposes. Notwithstanding any provision to the
contrary, all taxes associated with any amounts paid to or for the benefit of a
Plan Participant under the Plan shall be borne by the Plan Participant.
j.Effective Date. The Effective Date of the Plan, as amended and restated and
set forth herein, shall be January 1, 2011.