Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of this 18th day of
August, 2014 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT,
INC., a Delaware corporation (the “Company”), and ANTHONY M. SANFILIPPO, an
individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company employed Executive as its Chief Executive Officer pursuant to the
terms and conditions of an Amended and Restated Employment Agreement executed on
March 1, 2011, as amended by the First Amendment to Amended and Restated
Employment Agreement, dated December 14, 2011, and as further amended by the
Second Amendment to Amended and Restated Employment Agreement, dated May 21,
2013 (the “Current Agreement”).

The Company wishes to continue to employ Executive as its Chief Executive
Officer pursuant to the terms and conditions of this Agreement and Executive
desires to be so employed. The parties wish to replace and supersede the Current
Agreement in all respects with the terms and conditions of this Agreement.

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

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Chief
Executive Officer of the Company, and Executive hereby accepts such engagement
by the Company upon the terms and conditions specified below. Throughout the
Term (as hereinafter defined) the Company will recommend that Executive be
elected as a member of the Board of Directors (the “Board”). Executive agrees to
submit a written resignation to the Board immediately upon the termination of
his employment for any reason, which the Board may accept or reject.

1.2 Term. The term of this Agreement shall commence as of the Effective Date
and, unless earlier terminated under Article 6 below, shall continue in force
until August 31, 2019 (the “Initial Term”); provided that commencing on
April 30, 2019 and as of April 30 of each year thereafter (a “Renewal Date”),
this Agreement shall automatically renew for additional one-year periods (each,
a “Renewal Period”), unless either party gives notice of non-renewal at least
one hundred twenty (120) days prior to the next Renewal Date. The Initial Term
of this Agreement, together with any Renewal Periods, is referred to as the
“Term.”

 

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ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally
associated with the position of Chief Executive Officer subject to the control
and supervision of the Board (or a committee thereof), and such other executive
duties consistent with the foregoing as may be assigned to him from time to time
by the Company. Executive shall perform the services contemplated herein
faithfully, diligently, to the best of his ability and in the best interests of
the Company. Executive shall at all times perform such services in compliance
with, and to the extent of his authority, shall to the best of his ability cause
the Company to be in compliance with, any and all laws, rules and regulations
applicable to the Company of which Executive is aware. Executive shall, at all
times during the Term, in all material respects adhere to and obey any and all
written internal rules and regulations governing the conduct of the Company’s
employees, as established or modified from time to time; provided, however, in
the event of any conflict between the provisions of this Agreement and any such
rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at
the Company’s headquarters in Las Vegas, Nevada, or at such other location as
Executive and the Board shall agree upon. Executive understands he will be
required to travel to the Company’s various operations as part of his
employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive
shall devote his entire business time, attention, energies, skills, learning and
best efforts to the business of the Company. Executive may participate in
social, civic, charitable, religious, business, educational or professional
associations so long as such participation does not materially interfere with
the duties and obligations of Executive hereunder. This Section 2.3, however,
shall not be construed to prevent Executive from making passive outside
investments so long as such investments do not require material time of
Executive or otherwise interfere with the performance of Executive’s duties and
obligations hereunder. Executive shall not make any investment in an enterprise
that competes with the Company without the prior written approval of the Company
after full disclosure of the facts and circumstances; provided, however, that
this sentence shall not preclude Executive from owning up to one-half percent
(0.5%) of the securities of a publicly traded entity (a “Permissible
Investment”). During the Term, Executive shall not, directly or indirectly, work
for or provide services to or, except as permitted above, own an equity interest
in any person, firm or entity engaged (directly or indirectly through an
investment in another entity) in the casino gaming, card club, video lottery
terminal (“VLT”) or horse racing business. In this regard, and for purposes of
this section only, Executive acknowledges that the gaming industry is national
in scope and that accordingly this covenant shall apply throughout the United
States. With the prior approval of the Board (which approval may subsequently be
revoked by the Board in its discretion) Executive may (i) serve on boards of
charitable and not for profit organizations; (ii) serve on one board of a for
profit public corporation in addition to the Company’s Board (and retain any
compensation received therefrom); and (iii) serve on boards of privately held
entities in which Executive has an ownership interest (and retain any
compensation received therefrom); so long as such activities, individually or in
the aggregate do not materially interfere with Executive’s duties hereunder.

 

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ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the
Company shall pay Executive an annual base salary at the rate of One Million Two
Hundred Thousand Dollars ($1,200,000) per year during each of the years of the
Term, subject to increase at the discretion of the Compensation Committee of the
Board (the “Committee”), payable in accordance with the Company’s regular
payroll schedule from time to time (less any deductions required for Social
Security, state, federal and local withholding taxes, and any other authorized
or mandated similar withholdings). Executive shall not receive any compensation
for services as a member of the Board.

3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with
respect to each year of the Term during which Executive is employed under this
Agreement up to not less than Two Hundred Percent (200%) of his base salary,
with a targeted bonus of not less than One Hundred Percent (100%) of Executive’s
base salary (such targeted bonus, as may be increased from time to time, the
“Target Bonus”), determined under the Company’s Annual Performance Based Plan
for Executive Officers, or any successor Plan (the “Bonus Plan”), provided that
such percentages are subject to increase at the discretion of the Committee. Any
such bonus shall be based on performance criteria developed by the Committee.
Any such bonus shall be subject to (i) the Executive being employed by the
Company on the last day of the Company’s fiscal year or such later date as the
Bonus Plan shall specify; and (ii) the Company’s Policy on Recovery of Incentive
Compensation in Event of Financial Restatement attached as Appendix A hereto (or
any successor policy). Any such bonus earned by Executive shall be paid annually
as soon as practicable (but in no event later than March 15th) after the
conclusion of the Company’s fiscal year, except for any portion of the bonus
which is paid in the Company’s discretion in restricted stock units or other
equity award, and any portion of the bonus which Executive shall elect to defer
under the Company’s deferred compensation plan. Bonuses relative to partial
years shall be prorated. Executive may also receive special bonuses in addition
to his annual bonus eligibility at the discretion of the Board or the Committee;
it being understood that there is no entitlement thereto hereunder. Any bonuses
paid hereunder shall be paid, in the Company’s discretion, in cash, restricted
stock units and/or other equity awards; provided, however, that Executive’s
allocation of cash, restricted stock units and other equity awards shall be the
same as that of other senior executives offices for the year in question, except
as may be provided under the Bonus Plan.

3.3 Equity Awards. The Company may provide Equity Awards to Executive pursuant
to, and subject to the terms and conditions of, the then current equity
compensation plan of the Company. The Committee shall set the amount and terms
of such Equity Awards. For purposes of this Agreement, “Equity Awards” includes
all awards of equity granted to Executive, including but not limited to,
options, restricted stock units, restricted stock, performance shares,
performance share units, and stock appreciation rights.

3.4 Retention Restricted Stock Units. On the Effective Date or as soon as
practicable thereafter, Executive shall be granted a restricted stock unit award
on the terms and conditions described on Appendix B hereto and on such other
customary terms and conditions as the

 

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Company may require (the “Retention RSU’s”). The provisions of Appendix B
hereto, including without limitation the provision regarding the condition to
vesting for all of Executive’s restricted stock unit awards (including the
Retention RSU’s), are hereby incorporated by reference in their entirety.

3.5 Retention Stock Option Grants. On the Effective Date or as soon as
practicable thereafter, Executive shall be granted non-qualified stock options
on the terms and conditions described on Appendix C hereto and on such other
customary terms and conditions as the Company may require.

ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable
generally to other senior executives of the Company pursuant to the Company’s
personnel policies from time to time, Executive shall be entitled to not less
than four (4) weeks of vacation each calendar year, without reduction in
compensation. Vacation expense will not accrue and unused vacation time will not
accrue for severance purposes.

4.2 Benefits. Executive shall receive all other such benefits as the Company may
offer to other senior executives of the Company generally under the Company
personnel plans, practices, policies and programs in effect from time to time,
such as health and disability insurance coverage, paid sick leave and fully
eligible participation in deferred compensation plans. The Company will provide
an executive physical on an annual basis to Executive and his spouse. The
Company shall provide Executive coverage for those benefit items made generally
available to its senior level executive employees on the same terms provided to
its other senior level executive employees.

4.3 Indemnification. Executive shall have the benefit of indemnification to the
fullest extent permitted by applicable law, which indemnification shall continue
after the termination of this Agreement for such period as may be necessary to
continue to indemnify Executive for his acts while an officer of the Company. In
addition, the Company shall cause Executive to be covered by the Company’s
policies of directors and officers liability insurance in effect from time to
time in accordance with their terms, to the maximum extent of the coverage
available for any director or officer of the Company.

ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary
expenses incurred by Executive in the performance of his duties or otherwise in
furtherance of the business of the Company in accordance with the policies of
the Company in effect from time to time. Executive shall keep accurate and
complete records of all such expenses, including but not limited to, proof of
payment and purpose. Executive shall account fully for all such expenses to the
Company. No reimbursement will be made later than the close of the calendar year

 

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following the calendar year in which the expense was incurred. Expenses eligible
for reimbursement in any one taxable year shall not affect the amount of
expenses eligible for reimbursement in any other taxable year, and the right to
expense reimbursement shall not be subject to liquidation or exchange for any
other benefit.

ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.3, the
Company shall have the right to terminate Executive’s employment, without
further obligation or liability to Executive, upon the occurrence of any one or
more of the following events, which events shall be deemed termination for cause
(“Cause”).

6.1.1 Failure to Perform Duties. If Executive neglects to perform the material
duties of his employment under this Agreement in a professional and businesslike
manner, other than due to his Disability (unless such Disability is due to
substance or alcohol abuse), after having received thirty (30) days written
notice specifying such failure to perform and a reasonable opportunity to
perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this
Agreement and fails to cure such breach within thirty (30) days of written
notice thereof or commits a material willful breach of his fiduciary duty to the
Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony or misdemeanor
involving acts of moral turpitude or commits fraud, misrepresentation,
embezzlement or other acts of material misconduct against the Company (including
violating or condoning the violation of any material rules or regulations of
gaming authorities which could have a material adverse effect on the Company)
that would make the continuance of his employment by the Company materially
detrimental to the Company.

6.1.4 Failure To Be Licensed or Approved by the Company’s Compliance Committee.
Executive shall promptly, accurately and truthfully complete all forms provided
by the Company’s Compliance Committee and shall fully cooperate in any
background investigation conducted pursuant to the Company’s Compliance Program.
Executive shall also apply for all applicable gaming licenses, if required,
within ninety (90) days of the Effective Date of this Agreement, to the extent
Executive is not already licensed or on file as of the date hereof. If Executive
fails to be recommended for approval and retention by the Compliance Committee
or Executive fails to be licensed in all jurisdictions in which the Company or
its subsidiaries has gaming facilities within the date required by any
jurisdiction, or if any of such licenses shall be revoked or suspended at any
time during the Term, or if the Company is directed to cease business with
Executive by any governmental authority; or if the Company determines in its
reasonable judgment that Executive was or might be involved in, or is about to
be involved in, any activity, relationship(s) or circumstance which could or
does jeopardize the Company’s business, reputation or any of such licenses; or
any of the Company’s licenses is threatened to be, or is, denied, curtailed,
suspended or revoked as a result of Executive’s employment by the Company or as
a result of his actions, then the Company may by thirty (30)

 

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days written notice to Executive terminate the Agreement for Cause. Executive
agrees to promptly submit to the licensing requirements of all jurisdictions in
which the Company or its subsidiaries does business. The Company shall bear all
expenses incurred in connection with such licenses.

6.2 Death or Disability. Executive’s employment shall terminate on Executive’s
death and the Company may terminate Executive’s employment due to “Disability.”
Executive will be deemed to have a “Disability” when he is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a substantially continuous period of not less than 180
days, or begins receiving income replacement benefits for a period of not less
than three months under an accident and health plan of the Company or an
affiliate by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 6 months. If there should be a dispute
between the Company and Executive as to Executive’s physical or mental
Disability for purposes of this Agreement, the question shall be settled by the
opinion of an impartial reputable physician or psychiatrist agreed upon by the
parties or their representatives, or if the parties cannot agree within ten
(10) days after a request for designation of such party, then a physician or
psychiatrist designed by the Clark County Medical Association or similar body.
The certification of such a physician or psychiatrist as to the questioned
dispute shall be final and binding upon the parties hereto.

6.3 Termination Without Cause. Notwithstanding anything to the contrary herein,
the Company shall have the right to terminate Executive’s employment under this
Agreement at any time without Cause by giving thirty (30) days written notice of
such termination to Executive. Failure by the Company to extend the Term for any
Renewal Period shall not be a termination of this Agreement without Cause.

6.4 Termination by Executive for Good Reason. Executive may terminate his
employment under this Agreement on thirty (30) days prior notice to the Company
for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason”
shall mean and be limited to (i) a material breach of this Agreement by the
Company (including without limitation the assignment to Executive of duties
materially inconsistent with his status as Chief Executive Officer of the
Company, or any material reduction in the authority, duties or responsibilities
of Executive, including any such material reduction caused by the appointment of
an executive or non-executive Chairman of the Board whose authority materially
limits Executive’s authority, duty or responsibility); or (ii) any relocation of
his or its principal place of business outside the greater Las Vegas
metropolitan area (without Executive’s consent); or (iii) the requirement that
Executive report to anyone other than the Board or a committee thereof; or
(iv) the failure of Executive to be nominated and recommended for election or
re-election, as appropriate, as a member of the Board; or (v) a material
reduction by the Company in Executive’s then base salary or Target Bonus, a
material reduction in other benefits (except as such benefits may be changed or
reduced for other senior executives), or the failure by the Company to pay
Executive any material portion of his current compensation when due; or
(vi) following a Change of Control, (A) the failure of any acquiring or
successor company, or, if the acquiring or successor company is a subsidiary of
another company, the failure of the highest-level parent of the acquiring or
successor company, to enter into an agreement naming Executive as the Chief
Executive Officer

 

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of the acquiring or successor company with duties materially consistent with
Executive’s duties as Chief Executive Officer of the Company, or, if the
acquiring or successor company is a subsidiary of another company, of the
highest-level parent with duties materially consistent with Executive’s duties
as Chief Executive Officer of the Company, as the case may be; or (B) a
requirement that Executive, as Chief Executive Officer of the acquiring or
successor company or highest-level parent, must report to an executive or
non-executive Chairman of the Board of Directors whose authority materially
limits Executive’s authority, duty or responsibility; or (C) Executive’s
termination for Good Reason from the Company and any parent entity or
termination without Cause by the Company and any parent entity within
twenty-four (24) months of a Change in Control. For the avoidance of doubt, each
of the conditions described in clauses (i), (ii), (iii), (iv), (v) and (vi) of
the preceding sentence is a separate and independent basis for termination by
Executive for Good Reason. Notwithstanding the foregoing, except with respect to
a termination by Executive following a Change of Control, Executive’s
resignation shall not be treated as a resignation for Good Reason unless
(a) Executive notifies the Company (including any acquiring and/or successor
company) in writing of a condition constituting Good Reason within thirty
(30) days following Executive’s becoming aware of such condition; (b) the
Company fails to remedy such condition within thirty (30) days following such
written notice (the “Remedy Period”); and (c) Executive resigns within thirty
(30) days following the expiration of the Remedy Period. Further, in the event
that Executive resigns for Good Reason and within two years from such date
accepts employment with the Company, any acquirer or successor to the Company’s
business or any affiliate, parent, or subsidiary of either the Company or its
successor, then Executive will forfeit any right to severance payments hereunder
and will reimburse the Company for the full amount of such payments received by
Executive within thirty (30) days of accepting such employment.

6.5 Effect of Termination.

6.5.1 Payment of Salary, Bonus and Expenses Upon Termination. Any termination
under this Section 6 shall be effective upon receipt of notice by Executive or
the Company, as the case may be, of such termination or upon such other later
date as may be provided herein or specified by the Company or Executive in the
notice (the “Termination Date”), except as otherwise provided in this Section 6.
If Executive’s employment is terminated, all benefits provided to Executive by
the Company hereunder shall thereupon cease, except as provided in this
Section 6.5, and the Company shall pay or cause to be paid to Executive all
accrued but unpaid base salary, any compensation previously voluntarily deferred
by Executive payable in accordance with the provisions of the applicable
deferred compensation plan and in accordance with Executive’s election under
such plan, and, except in the case of Termination for Cause, as additional
severance and notwithstanding the provisions of Section 3.2 hereof, a prorated
bonus for the year of termination. Such prorated bonus shall be determined and
paid as follows: (a) First, the performance criteria shall be applied to the
entire year of termination to determine the bonus that Executive would have
received for the entire year if his employment had not terminated, (b) Second,
the amount determined under clause (a) of this sentence shall be multiplied by a
fraction, the numerator of which is the number of days in the year before the
date of the termination of Executive’s employment and the denominator of which
is three hundred sixty five (365), to determine the amount of the prorated
bonus, and (c) Third, the prorated bonus shall be paid at the times and in the
form specified when the Committee determined the performance criteria for the
year, or, if no such time was then specified, as soon as practicable

 

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(but in no event later than March 15th) after the end of the year in which the
termination of employment occurred. If at the Termination Date, Executive shall
have satisfied all the requirements to earn an annual bonus relative to the
calendar year immediately preceding or ending on the Termination Date but such
bonus has not yet been paid, then except in the case of a Termination for Cause,
such bonus shall be paid to Executive at the same time such bonus was otherwise
scheduled to have been paid. In addition, promptly upon submission by Executive
of his unpaid expenses incurred prior to the Termination Date and owing to
Executive pursuant to Article 5, reimbursement for such expenses shall be made.
If Executive’s employment is terminated for “Cause,” or by the Executive without
“Good Reason”, Executive shall not be entitled to receive any payments other
than as specified in this Section 6.5.1. Termination by the Company for Cause
shall be in addition to and without prejudice to any other right or remedy that
the Company may be entitled to at law, in equity, or under this Agreement.

6.5.2 Termination Without Cause or Termination by Executive for Good Reason
Other than in Connection with a Change of Control. If the Company terminates
Executive’s employment without Cause or Executive terminates his employment for
Good Reason (other than in connection with a Change of Control as contemplated
by Section 6.5.4), the following shall apply:

 

  (a) Executive shall be entitled to receive an amount equal to one hundred
fifty percent (150%) times (i) Executive’s annual base salary (such multiple of
such annual base salary, the “Base Severance Benefit”) in effect on the date of
termination; plus (ii) the total dollar value of the average annual bonus
(whether paid in cash, in the form of equity or a combination thereof) paid to
Executive in the three years prior to termination (such multiple of such average
annual bonus, the “Bonus Amount”). The Base Severance Benefit shall be paid to
Executive in equal monthly installments over eighteen (18) months immediately
following the date of termination in accordance with the Company’s regular
salary payment schedule from time to time. The Bonus Amount shall be paid in
cash in two equal annual installments on the first and second anniversaries of
the termination of employment. In addition, Executive shall be entitled to
receive any amounts payable under Section 6.5.1 above. The payments contemplated
herein shall not be subject to any duty of mitigation by Executive nor to offset
for any income earned by Executive following termination. Notwithstanding the
foregoing, continuing payments of the Base Severance Benefit and the Bonus
Amount shall immediately cease and any such payments of the Base Severance
Benefit and the Bonus Amount that have not yet been paid shall be forfeited in
the event Executive materially breaches any of the covenants and agreements
contained in Article 7.

 

  (b)

Executive shall also be entitled to receive health benefits coverage for
Executive and his dependents, and disability insurance coverage for Executive,
under the same plan(s) or arrangement(s)

 

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  under which Executive and his dependents were covered immediately before his
termination of employment or plan(s) established or arrangement(s) provided by
the Company or any of its Subsidiaries thereafter for the benefit of senior
executives (the “Health and Disability Coverage Continuation”) until the
earliest of (i) twenty-four (24) months; and (ii) the date Executive (and in the
case of his dependents, the dependents) becomes covered or eligible for coverage
under any other group health plan or group disability plan (as the case may be)
not maintained by the Company or any of its Subsidiaries; provided, however,
that if such other group health plan excludes any pre-existing condition that
Executive or Executive’s dependents may have when coverage under this
Section 6.5.2 shall continue (but not beyond the period described in clause
(i) of this sentence) with respect to such pre-existing condition until such
exclusion under such other group health plan lapses or expires. The Company
shall pay any applicable premiums on such insurance coverage; provided, however,
that if at any time the Company determines that its payment of such premiums
would result in a violation of the nondiscrimination rules of Section 105(h)(2)
of the Internal Revenue Code of 1986, as amended (the “Code”) or any other Code
section, law or regulation of similar effect (including but not limited to the
2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health
Care and Education Reconciliation Act), then in lieu of paying such premiums,
the Company will instead pay to Executive a fully taxable monthly cash payment
in an amount such that, after payment by Executive of all taxes on such payment,
Executive retains an amount equal to the premiums the Company would have paid
for such month, with such monthly payment being made on the last day of each
month for the remainder of the twenty four (24) month period. In the event
Executive is required to make an election under Sections 601 through 607 of the
Employee Retirement Income Security Act of 1974, as amended (commonly known as
COBRA) to qualify for the benefits described in this Section 6.5.2, the
obligations of the Company and its Subsidiaries under this Section 6.5.2 shall
be conditioned upon Executive’s timely making such an election. Nothing
contained herein shall prevent Executive or his dependents from securing
continued coverage under COBRA at their own expense to the extent permitted by
COBRA or otherwise applicable law. Any payment or reimbursement of benefits
under this Section 6.5.2 that is taxable to Executive or his dependents shall be
made by December 31 of the calendar year following the calendar year in which
Executive or his dependent incurred the expense. Expenses eligible for
reimbursement in any one taxable year shall not affect the amount of expenses
eligible for

 

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  reimbursement in any other taxable year, and the right to expense
reimbursement shall not be subject to liquidation or exchange for any other
benefit.

 

  (c)

Notwithstanding anything to the contrary in the Company’s equity plans or any
applicable award agreements thereunder: (i) with respect to outstanding Equity
Awards that do not contain performance-based vesting conditions, the portion of
such Equity Award(s) that would have become vested and/or exercisable pursuant
to any time-based vesting conditions during the eighteen (18) month period
following the date of the termination of employment shall continue to vest on
the schedule set forth in the applicable award agreement as if Executive’s
employment had not terminated; provided, however, that such continued vesting
shall immediately cease and any Equity Award that has not been exercised and/or
paid shall be forfeited in the event Executive materially breaches any of the
covenants and agreements contained in Article 7 (such “material” qualifier to
apply to all Equity Awards where such breach provision exists); provided,
further, however, that this subsection 6.5.2(c)(i) shall not apply to the
Retention RSU’s and, instead, subsection 6.5.2(c)(iii) shall govern the
Retention RSU’s; (ii) with respect to any outstanding equity-based awards with
performance-based vesting conditions, the Executive shall be entitled to
participate in such performance-based awards on a pro-rata basis at the end of
the applicable performance period (with such determination to be based on actual
performance through the applicable performance period) and such pro-rata portion
of such performance-based awards, if any, shall be equal to (a) (I) the number
of full months Executive was employed during the applicable performance period
plus (II) eighteen (18) months of continued accrual of service credit following
the date of termination of employment (or, if shorter, through the end of the
performance period), divided by (b) the full length of such performance period
(expressed in months), and on that pro-rated basis shall vest and/or be paid on
the schedule set forth in the applicable award agreement as if Executive’s
employment had not terminated; provided, however, that such continued accrual of
service credit shall immediately cease and any such performance-based awards
that have not yet been exercised and/or paid shall be forfeited in the event
Executive materially breaches any of the covenants and agreements contained in
Article 7 (such “material” qualifier to apply to all Equity Awards where such
breach provision exists); and (iii) with respect to the Retention RSU’s, in the
event that the date of termination of employment is prior to the third
anniversary of the Effective Date, then a prorated portion of the Retention
RSU’s shall immediately vest upon the date of termination of employment in the
following amount: the number of

 

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  units covered by the Retention RSU’s shall be multiplied by a fraction, the
numerator of which is the number of days from the Effective Date up to but not
including the date of the termination of Executive’s employment and the
denominator of which is one thousand ninety-six (1,096), and that prorated
number of units shall vest.

6.5.3 Termination for Death or Disability. If Executive dies or the Company
terminates Executive’s employment due to Disability, the following shall apply:

 

  (a) Executive (or the Sanfilippo Family Trust dated February 1, 2012, as the
case may be) shall be entitled to receive any amounts payable under
Section 6.5.1 above.

 

  (b)

Executive shall also be entitled to Health and Disability Coverage Continuation
for Executive and his dependents until the earliest of (i) twenty-four
(24) months; and (ii) the date Executive (and in the case of his dependents, the
dependents) becomes covered or eligible for coverage under any other group
health plan or group disability plan (as the case may be) not maintained by the
Company or any of its Subsidiaries; provided, however, that if such other group
health plan excludes any pre-existing condition that Executive or Executive’s
dependents may have when coverage under this Section 6.5.3 shall continue (but
not beyond the period described in clause (i) of this sentence) with respect to
such pre-existing condition until such exclusion under such other group health
plan lapses or expires. The Company shall pay any applicable premiums on such
insurance coverage; provided, however, that if at any time the Company
determines that its payment of such premiums would result in a violation of the
nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of
1986, as amended (the “Code”) or any other Code section, law or regulation of
similar effect (including but not limited to the 2010 Patient Protection and
Affordable Care Act, as amended by the 2010 Health Care and Education
Reconciliation Act), then in lieu of paying such premiums, the Company will
instead pay to Executive (or the Sanfilippo Family Trust dated February 1, 2012,
as the case may be) a fully taxable monthly cash payment in an amount such that,
after payment by Executive (or the Sanfilippo Family Trust dated February 1,
2012) of all taxes on such payment, Executive (or the Sanfilippo Family Trust
dated February 1, 2012) retains an amount equal to the premiums the Company
would have paid for such month, with such monthly payment being made on the last
day of each month for the remainder of the twenty four (24) month period. In the
event Executive is required to make an election under Sections 601 through 607
of the Employee Retirement Income Security Act of

 

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  1974, as amended (commonly known as COBRA) to qualify for the benefits
described in this Section 6.5.3, the obligations of the Company and its
Subsidiaries under this Section 6.5.3 shall be conditioned upon Executive’s
timely making such an election. Nothing contained herein shall prevent Executive
or his dependents from securing continued coverage under COBRA at their own
expense to the extent permitted by COBRA or otherwise applicable law. Any
payment or reimbursement of benefits under this Section 6.5.3 that is taxable to
Executive or his dependents or the Sanfilippo Family Trust dated February 1,
2012 shall be made by December 31 of the calendar year following the calendar
year in which Executive or his dependent incurred the expense. Expenses eligible
for reimbursement in any one taxable year shall not affect the amount of
expenses eligible for reimbursement in any other taxable year, and the right to
expense reimbursement shall not be subject to liquidation or exchange for any
other benefit.

 

  (c) Notwithstanding anything to the contrary in the Company’s equity plans or
any applicable award agreements thereunder: (i) with respect to outstanding
Equity Awards (including without limitation, the Retention RSU’s) that do not
contain performance-based vesting conditions, such Equity Award(s) that would
have become vested and/or exercisable pursuant to any time-based vesting
conditions shall immediately become fully vested and exercisable and may be
exercised in accordance with their terms and Section 6.6 hereof; provided,
however, that any Equity Award that has not been exercised and/or paid shall be
forfeited in the event Executive materially breaches any of the covenants and
agreements contained in Article 7 (such “material” qualifier to apply to all
Equity Awards where such breach provision exists); and (ii) with respect to any
outstanding Equity Awards with performance-based vesting conditions, all such
performance-based awards shall continue to vest and/or be paid on the schedule
set forth in the applicable award agreement as if Executive’s employment had not
terminated; provided, however, that such continued vesting shall immediately
cease and any such performance-based awards that have not yet been exercised
and/or paid shall be forfeited in the event Executive materially breaches any of
the covenants and agreements contained in Article 7 (such “material” qualifier
to apply to all Equity Awards where such breach provision exists).

 

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6.5.4 Termination Without Cause or Termination by Executive for Good Reason at
the Time of or Within Twenty-Four (24) Months After a Change of Control. If the
Company terminates Executive’s employment without Cause or Executive terminates
his employment for Good Reason at the time of or within twenty-four (24) months
after a Change of Control, the following shall apply:

 

  (a) Executive shall be entitled to receive any amounts payable under
Section 6.5.1 above.

 

  (b) The Company shall pay to Executive in lieu of the Base Severance Benefit
and the Bonus Amount, in a lump sum as soon as practicable, but in no event
later than thirty (30) days after the termination of Executive’s employment, an
amount equal to two hundred percent (200%) of the sum of Executive’s annual base
salary in effect on the date of termination and the Target Bonus for the year of
termination.

 

  (c) In addition, Executive shall also be entitled to receive continuation of
health and disability insurance coverage as specified in Section 6.5.2(b) and
all unvested Equity Awards (including without limitation, the Retention RSU’s),
including any unvested replacement Equity Awards that may have been granted to
Executive to replace unvested Equity Awards that expired by their terms in
connection with a Change of Control, shall immediately become fully vested and
may be exercised in accordance with their terms and Section 6.6 hereof and with
respect to performance-based Equity Awards, all such awards shall be considered
to be earned at target levels and payable as of the termination of Executive’s
employment. To the extent that any unvested Equity Awards terminate by their
terms at the time of or in connection with a Change of Control and replacement
Equity Awards of at least equivalent value are not granted to Executive, the
Executive shall receive as additional cash severance at the time of termination
the consideration paid by the acquiring person for the securities underlying the
unvested expired Equity Awards at the time of the Change of Control less, to the
extent applicable, (a) the exercise price or other consideration payable by
Executive for the Equity Awards; and (b) the value of any replacement Equity
Awards realized by Executive through or as a result of such termination.

 

  (d) For purposes of this Agreement, a “Change of Control” shall mean the
occurrence of any of the following:

 

  (i) The direct or indirect acquisition by an unrelated “Person” or “Group” or
“Beneficial Ownership” (as such terms are defined below) of more than 50% of the
voting power of the Company’s issued and outstanding voting securities in a
single transaction or a series of related transactions;

 

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  (ii) The direct or indirect sale or transfer by the Company of substantially
all of its assets to one or more unrelated Persons or Groups in a single
transaction or a series of related transactions;

 

  (iii) The merger, consolidation or reorganization of the Company with or into
another corporation or other entity in which the Beneficial Owners of more than
50% of the voting power of the Company’s issued and outstanding voting
securities immediately before such merger or consolidation do not own more than
50% of the voting power of the issued and outstanding voting securities of the
surviving corporation or other entity immediately after such merger,
consolidation or reorganization; or

 

  (iv) During any consecutive 12-month period, individuals who at the beginning
of such period constituted the Board of the Company (together with any new
Directors whose election to such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
Directors of the Company then still in office who were either Directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if
such event is not a “Change in Control Event” under Treasury Regulation
Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining
whether a Change of Control has occurred, the following Persons and Groups shall
not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly
has Beneficial Ownership of more than 50% of the issued and outstanding voting
power of the Company’s voting securities immediately before the transaction in
question, (B) the Company has Beneficial Ownership of more than 50% of the
voting power of the issued and outstanding voting securities of such Person or
Group, or (C) more than 50% of the voting power of the issued and outstanding
voting securities of such Person or Group are owned, directly or indirectly, by
Beneficial Owners of more than 50% of the issued and outstanding voting power of
the Company’s voting securities immediately before the transaction in question.
The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership”
shall have the meanings used in the Securities Exchange Act of 1934, as amended.
Notwithstanding the foregoing, (I) Persons shall not be considered to be acting
as a “Group” solely because they purchase or own stock of the Company at the
same time, or as a result of the same public offering, (II) however, Persons
will be considered to be acting as “Group” if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction, with the Company, and (III) if a Person, including
an entity, owns stock both in the Company and in a corporation that enters into
a merger, consolidation, purchase or acquisition of stock, or similar
transaction, with the Company, such shareholders shall be considered to be
acting as a Group with other shareholders only with respect to the ownership in
the corporation before the transaction.

 

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6.5.5 I.R.C. Section 409A. (a) The compensation arrangements under this
Agreement are intended to comply with, or be exempt from, Section 409A of the
Code, and the regulations and guidance promulgated thereunder (collectively
“Code Section 409A”), and will be interpreted in a manner intended to comply
with, or be exempt from, Code Section 409A. If any payment of money or other
benefits due to the Executive hereunder could cause the application of an
accelerated or additional tax under Code Section 409A (a “409A Tax”), the
Company, in its sole discretion, may decide such payments or other benefits
shall be restructured, to the extent possible, in a manner, determined by the
Company, that does not cause such 409A Tax; provided, however, neither the
Company, nor its respective officers, employees and/or representatives, shall
have any liability to the Executive with respect to any such determination, or
any such taxes, interest or penalties, or liability for any other alleged
damages related thereto. (b) In the event that any compensation with respect to
Executive’s separation from service is “deferred compensation” within the
meaning of Code Section 409A, the stock of the Company or any affiliate is
publicly traded on an established securities market or otherwise, and Executive
is determined to be a “specified employee,” as defined in
Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be
delayed as required by Code Section 409A. Such delay shall last six months from
the date of Executive’s separation from service, except in the event of
Executive’s death. Within thirty (30) days following the end of such six-month
period, or, if earlier, Executive’s death, the Company will make a catch-up
payment to Executive equal to the total amount of such payments that would have
been made during the six-month period but for this Section 6.5.4. Whenever
payments under this Agreement are to be made in installments, each such
installment shall be deemed to be a separate payment for purposes of
Section 409A. Payments of compensation or benefits on Executive’s termination of
employment (other than accrued salary and other accrued amounts that must be
paid under applicable law, and “welfare benefits” specified in Treasury
Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the
termination of employment constitutes a “separation from service” under Treasury
Regulation Section 1.409A-1(h).

6.5.6 Suspension. In lieu of terminating Executive’s employment hereunder for
Cause under Section 6.1, the Company shall have the right, at its sole election,
to suspend the performance of duties by Executive under this Agreement during
the continuance of events or circumstances under Section 6.1 for an aggregate of
not more than thirty (30) days during the Term (the “Default Period”) by giving
Executive written notice of the Company’s election to do so at any time during
the Default Period. The Company shall have the right to extend the Term beyond
its normal expiration date by the period(s) of any suspension(s). The Company’s
exercise of its right to suspend the operation of this Agreement shall not
preclude the Company from subsequently terminating Executive’s employment
hereunder; provided nothing herein shall eliminate the Company’s obligation to
provide required written notice, or prevent Executive from having the
opportunity to cure any defect raised in such notice, to the extent applicable
under the relevant subsection of Section 6.1. Executive shall not render
services to any other person, firm or corporation in the casino business during
any period of suspension. Executive shall be entitled to continued compensation
and benefits pursuant to the provisions of this Agreement during the Default
Period.

 

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6.6 Exercisability and Termination of Equity Awards. Notwithstanding anything
contained in any award agreement or plan to the contrary, all of Executive’s
vested Equity Awards that contain exercise periods will terminate on the earlier
of (a) the expiration of their stated terms or (b) two (2) years after the
termination of Executive’s employment with the Company, regardless of the cause
of such termination, except that, (x) in the event of Executive’s termination of
his employment without Good Reason, all vested Equity Awards will terminate on
the earlier of (I) the expiration of the stated term, or (II) eighteen
(18) months after the termination, and (y) in the event of a termination for
“Cause,” all vested Equity Awards will terminate on the earlier of (I) the
expiration of the stated term, or (II) thirty (30) days after the termination;
provided, however, that in the event of a termination under Section 6.5.2 or
6.5.3 or Executive’s termination of his employment without Good Reason or a
termination for “Cause,” any Equity Award that has not been exercised and/or
paid shall be forfeited in the event Executive materially breaches any of the
covenants and agreements contained in Article 7 (such “material” qualifier to
apply to all Equity Awards where such breach provision exists). Notwithstanding
anything contained in any award agreement or plan to the contrary, all of
Executive’s unvested Equity Awards will terminate on the termination of
Executive’s continuous status as an employee, director, or consultant with the
Company, except to the extent that such Equity Awards become vested as a result
of such termination (or to the extent such Equity Awards are expressly stated to
continue to vest as if Executive’s employment had not terminated or to continue
to accrue service credit) under the terms of the governing Equity Award
agreement, this Agreement or the applicable Company equity plan in which the
Equity Awards were granted to Executive.

6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any plan, program, policy or
practice provided by the Company or its subsidiaries and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
Executive may have under any other contract or agreement with the Company or its
subsidiaries at or subsequent to the Termination Date (“Other Benefits”), which
such Other Benefits shall be payable in accordance with such plan, policy,
practice or program or contract or agreement, except as explicitly modified by
this Agreement. Notwithstanding the foregoing, if Executive receives payments
and benefits pursuant to Article 6 of this Agreement, Executive shall not be
entitled to any severance pay or benefits under any severance plan, program or
policy of the Company and its subsidiaries, unless otherwise specifically
provided therein in a specific reference in or to this Agreement.

6.8 Full Settlement. Except as expressly provided for herein, in no event shall
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not Executive
obtains other employment.

 

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6.9 Release. Notwithstanding anything contained herein to the contrary, it shall
be a condition for Executive’s right to receive any severance benefits hereunder
that he execute a general release in favor of the Company and its affiliates in
the form as attached hereto and Appendix D and covering such additional matters
as may be reasonably requested by the Company, which release shall not encompass
the payments contemplated hereby; provided, however that the requirement that
Executive execute such a general release shall not apply in the event of a
termination due to death under Section 6.5.3 (Termination for Death or
Disability) hereof. The timing of payments under this Agreement upon the
execution of the general release shall be governed by the following provisions:

 

  (a) The Company must deliver the release to Executive for execution no later
than fourteen (14) days after Executive’s termination of employment. If the
Company fails to deliver the release to Executive within such fourteen (14) day
period, Executive will be deemed to have satisfied the release requirement and
will receive payments conditioned on execution of the release as though
Executive had executed the release and all revocation rights had lapsed at the
end of such 14 day period.

 

  (b) Executive must execute the release within forty-five (45) days from its
delivery to him.

 

  (c) If Executive has revocation rights, Executive shall exercise such rights,
if at all, not later than seven (7) days after executing the release.

 

  (d) In any case in which the release (and the expiration of any revocation
rights) could only become effective in a particular tax year of Executive,
payments that are subject to Code Section 409A and are conditioned on execution
of the release shall begin within twenty (20) days after the release becomes
effective and revocation rights have lapsed.

 

  (e) In any case in which the release (and the expiration of any revocation
rights) could become effective in one of two taxable years of Executive
depending on when Executive executes the release, payments that are subject to
Code Section 409A and are conditioned on execution of the release shall not
begin before the first business day of the later of such tax years.

6.10 Excise Tax Limitation.

6.10.1 Notwithstanding anything contained in this Agreement to the contrary,
(i) in the event that any payment or benefit (within the meaning of
Section 280G(b)(2) of the Code) to be paid or made payable to Executive or for
Executive’s benefit pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, Executive’s employment with the Company or
any of its Subsidiaries on a “change of control” within the meaning of
Section 280G of the Code (a “Payment” or “Payments”) would be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and
(ii) (A) the net amount of the Payments Executive would retain after payment of
the Excise Tax and federal and state income taxes on the Payments would be less
than (B) the net amount of the Payments Executive would retain, after payment of
the Excise Tax and federal and state income taxes on the Payments, if the
Payments were reduced to the extent necessary that no portion of the Payments
would be subject to the Excise Tax (the “Section 4999 Limit”), then the Payments
shall be reduced (but not below zero) to the

 

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Section 4999 Limit. If a reduction in the Payments is necessary so that the
Payments do not exceed the Section 4999 Limit and none of the Payments
constitute non-qualified deferred compensation (within the meaning of
Section 409A of the Code), then the reduction shall occur in the manner
Executive elects in writing prior to the date of payment. Any notice given by
Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other agreement, plan or arrangement governing Executive’s
rights and entitlements to any benefits or compensation. If any Payment
constitutes non-qualified deferred compensation or if Executive fails to elect
an order, then the Payments to be reduced will be determined in a manner which
has the least economic cost to Executive and, to the extent the economic cost is
equivalent, will be reduced in the inverse order of when payment would have been
made to Executive, until the reduction is achieved. For purposes of the
calculations described above, it shall be assumed that Executive’s tax rate will
be the maximum marginal federal and applicable state income tax rate on earned
income (taking into account the deductibility of any state taxes for purposes of
calculating any federal taxes).

6.10.2 All determinations required to be made under this Section 6.10 (each, a
“Determination”) shall be made, at the Company’s expense, by the accounting firm
which is the Company’s accounting firm prior to a “change of control” (within
the meaning of Section 280G of the Code) or another nationally recognized
accounting firm designated by the Board (or a committee thereof) prior to the
change of control (the “Accounting Firm”). The Accounting Firm shall provide its
calculations, together with detailed supporting documentation, both to the
Company and to Executive before payment of Executive’s Severance Payment
hereunder (if requested at that time by the Company or Executive) or such other
time as requested by the Company or Executive (in either case provided that the
Company or Executive believes in good faith that any of the Payments may be
subject to the Excise Tax). Within ten (10) calendar days of the delivery of the
Determination to Executive, Executive shall have the right to dispute the
Determination (the “Dispute”). The existence of any Dispute shall not in any way
affect Executive’s right to receive the Payments in accordance with the
Determination. If there is no Dispute, the Determination by the Accounting Firm
shall be final, binding and conclusive upon the Company and Executive, subject
to the application of Section 6.10.3.

6.10.3 As a result of the uncertainty in the application of Sections 4999 and
280G of the Code, it is possible that the Payments either will have been made or
will not have been made by the Company, in either case in a manner inconsistent
with the limitations provided in Section 6.10.1 (an “Excess Payment” or
“Underpayment”, respectively). If it is established pursuant to (i) a final
determination of a court for which all appeals have been taken and finally
resolved or the time for all appeals has expired, or (ii) an Internal Revenue
Service (the “IRS”) proceeding which has been finally and conclusively resolved,
that an Excess Payment has been made, such Excess Payment shall be deemed for
all purposes to be a loan to Executive made on the date Executive received the
Excess Payment and Executive shall repay the Excess Payment to the Company on
demand, together with interest on the Excess Payment at one hundred twenty
percent (120%) of the applicable federal rate (as defined in Section 1274(d) of
the Code) compounded semi-annually from the date of Executive’s receipt of such
Excess Payment until the date of such repayment. If it is determined (i) by the
Accounting Firm, the Company (which shall include the position taken by the
Company, together with its consolidated group, on its federal income tax return)
or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the
resolution to Executive’s satisfaction of the Dispute, that an Underpayment has
occurred, the

 

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Company shall pay an amount equal to the Underpayment to Executive within ten
(10) calendar days of such determination or resolution, together with interest
on such amount at one hundred twenty percent (120%) of the applicable federal
rate compounded semi-annually from the date such amount should have been paid to
Executive pursuant to the terms of this Agreement or otherwise, but for the
operation of this Section 6.10.3, until the date of payment.

ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties,
Executive may have access to confidential records, including, but not limited
to, development, marketing, organizational, financial, managerial,
administrative and sales information, data, specifications and processes
presently owned or at any time hereafter developed or used by the Company or its
agents or consultants that is not otherwise part of the public domain
(collectively, the “Confidential Material”). All such Confidential Material is
considered secret and is disclosed to Executive in confidence. Executive
acknowledges that the Confidential Material constitutes proprietary information
of the Company which draws independent economic value, actual or potential, from
not being generally known to the public or to other persons who could obtain
economic value from its disclosure or use, and that the Company has taken
efforts reasonable under the circumstances, of which this Section 7.1 is an
example, to maintain its secrecy. Except in the performance of his duties to the
Company or as required by a court order or any gaming regulator or as required
for his personal tax or legal advisors to advise him, Executive shall not,
directly or indirectly for any reason whatsoever, disclose, divulge,
communicate, use or otherwise disclose any such Confidential Material, unless
such Confidential Material ceases to be confidential because it has become part
of the public domain (not due to a breach by Executive of his obligations
hereunder). Executive shall also take all reasonable actions appropriate to
maintain the secrecy of all Confidential Information. All records, lists,
memoranda, correspondence, reports, manuals, files, drawings, documents,
equipment, and other tangible items (including computer software), wherever
located, incorporating the Confidential Material, which Executive shall prepare,
use or encounter, shall be and remain the Company’s sole and exclusive property
and shall be included in the Confidential Material. Upon termination of this
Agreement, or whenever requested by the Company, Executive shall promptly
deliver to the Company any and all of the Confidential Material, not previously
delivered to the Company, that is in the possession or under the control of
Executive.

7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how,
copyrightable works, maskworks, trade or service marks, trade secrets,
inventions, developments, discoveries, improvements and other matters that may
be protected by intellectual property rights, that relate to the Company’s
business and are the results of Executive’s efforts during the Term
(collectively, the “Executive Work Product”), whether conceived or developed
alone or with others, and whether or not conceived during the regular working
hours of the Company, shall be deemed works made for hire and are the property
of the Company. In the event that for whatever reason such Executive Work
Product shall not be deemed a work made for hire, Executive agrees that such
Executive Work Product shall become the sole and exclusive property of the
Company, and Executive hereby assigns to the Company his entire right, title and
interest in and to each and every patent, copyright, trade or service mark
(including any attendant

 

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goodwill), trade secret or other intellectual property right embodied in
Executive Work Product. The Company shall also have the right, in its sole
discretion to keep any and all of Executive Work Product as the Company’s
Confidential Material. The foregoing work made for hire and assignment
provisions are and shall be in consideration of this agreement of employment by
the Company, and no further consideration is or shall be provided to Executive
by the Company with respect to these provisions. Executive agrees to execute any
assignment documents the Company may require confirming the Company’s ownership
of any of Executive Work Product. Executive also waives any and all moral rights
with respect to any such works, including without limitation any and all rights
of identification of authorship and/or rights of approval, restriction or
limitation on use or subsequent modifications. Executive promptly will disclose
to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby
acknowledges that the sale or unauthorized use or disclosure of any of the
Company’s Confidential Material obtained by Executive by any means whatsoever,
at any time before, during or after the Term shall constitute unfair
competition. Executive shall not engage in any unfair competition with the
Company either during the Term or at any time thereafter.

7.4 Covenant Not to Compete. In the event Executive’s employment under this
Agreement is terminated by the Company or by Executive, for a reason other than
one specified in Section 6.2 or the expiration of the Term without this
Agreement being renewed, then during the Restriction Period (as defined below),
Executive shall not, directly or indirectly, work for or provide services to or
own an equity interest (except for a Permissible Investment) in any person, firm
or entity engaged (directly or indirectly or through an investment in another
entity) in the casino gaming, card club, VLT or horseracing business that
competes against the Company in any market as defined in the following sentence
(including without limitation any person, firm or entity whose only competitive
relationship with the Company is in the market as defined in the following
sentence in which the Company has its principal place of business but does not
also own or manage a casino in such market). For purposes of this Agreement,
“market” shall be defined as the area within a 100 mile radius of the Company’s
principal place of business or of any casino, card club, VLT or horseracing
facility owned (directly or indirectly or through an investment in another
entity) or operated or under construction by the Company or its affiliates,
except that for Louisiana, the area shall be limited to the following Louisiana
parishes: Calcasieu Parish, Bossier Parish, Caddo Parish, Jefferson Parish,
Orleans Parish, St. Mary Parish, East Baton Rouge Parish, Avoyelles Parish, St.
Landry Parish, Allen Parish, and Jefferson Davis Parish.

7.5 No Hire Away Policy. In the event Executive’s employment under this
Agreement is terminated prior to the normal expiration of the Term, either by
the Company, or by Executive, for any reason, then during the Restriction
Period, Executive shall not, directly or indirectly, for himself or on behalf of
any entity with which he is affiliated or employed, hire any person known to
Executive to be an employee of the Company or any of its subsidiaries (or any
person known to Executive to have been such an employee within six (6) months
prior to such occurrence). Executive shall not be deemed to hire any such person
so long as he did not directly or indirectly engage in or encourage such hiring.

 

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7.6 No Solicitation. During the Term and for a period of one (1) year
thereafter, or during the Restriction Period after the earlier termination of
Executive’s employment under this Agreement prior to expiration of the Term, and
regardless of the reason for such termination (whether by the Company or
Executive), Executive shall not directly or indirectly, for himself or on behalf
of any entity with which he is affiliated or employed, solicit any employee of
the Company or any of its subsidiaries (or any person who was such an employee
within six (6) months prior to such occurrence) or encourage any such employee
to leave the employment of the Company or any of its subsidiaries.

7.7 Non-Solicitation of Customers. During the Term and for a period of one
(1) year thereafter, or during the Restriction Period after the earlier
termination of Executive’s employment under this Agreement prior to the
expiration of the Term, and regardless of the reason for such termination
(whether by the Company or Executive), Executive shall not solicit any customers
of the Company or its subsidiaries or any of their respective casinos, card
clubs, VLT or horseracing facilities, or knowingly encourage any such customers
to leave the Company’s casinos, card clubs, VLT or horseracing facilities or
knowingly encourage any such customers to use the facilities or services of any
competitor of the Company or its subsidiaries. Executive shall at no times use
proprietary customer lists or Confidential Material to solicit customers.

7.8 Irreparable Injury. The promised service of Executive under this Agreement
and the other promises of this Article 7 are of special, unique, unusual,
extraordinary, or intellectual character, which gives them peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law.

7.9 Remedies for Breach. Executive agrees that money damages will not be a
sufficient remedy for any breach of the obligations under this Article 7 and
Article 2 hereof and that the Company shall be entitled to injunctive relief
(which shall include, but not be limited to, restraining Executive from directly
or indirectly working for or having an ownership interest (except for a
Permissible Investment) in any person engaged (directly or indirectly or through
an investment in another entity) in the casino gaming, card club, VLT or
horseracing businesses in any market (as defined in Section 7.4 hereof), and/or
using or disclosing the Confidential Material) and to specific performance as
remedies for any such breach. Executive agrees that the Company shall be
entitled to such relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of proving actual
damages and without the necessity of posting a bond or making any undertaking in
connection therewith. Any such requirement of a bond or undertaking is hereby
waived by Executive and Executive acknowledges that in the absence of such a
waiver, a bond or undertaking might otherwise be required by the court. Such
remedies shall not be deemed to be the exclusive remedies for any breach of the
obligations in this Article 7, but shall be in addition to all other remedies
available at law or in equity.

7.10 Restriction Period. As used in this Agreement, the term “Restriction
Period” shall mean a period equal to (i) a period of eighteen (18) months after
the effective date of termination of Executive’s employment under this Agreement
in the case of a termination without Cause by the Company or Executive’s
termination for Good Reason (other than in connection with a Change of Control
as contemplated by Section 6.5.4), or (ii) a period of one (1) year after the

 

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effective date of termination of Executive’s employment under this Agreement in
all other cases (including, without limitation, in the case of a termination
without Cause by the Company or Executive’s termination for Good Reason in
connection with a Change of Control as contemplated by Section 6.5.4).

ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any
controversy, dispute, or claim between the parties to this Agreement, including
any claim arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled
exclusively by arbitration, before a single arbitrator, in accordance with this
Article 8 and the then most applicable rules of the American Arbitration
Association. Judgment upon any award rendered by the arbitrator may be entered
by any state or federal court having jurisdiction thereof. Such arbitration
shall be administered by the American Arbitration Association. Arbitration shall
be the exclusive remedy for determining any such dispute, regardless of its
nature. Notwithstanding the foregoing, either party may in an appropriate matter
apply to a court for provisional relief, including a temporary restraining order
or a preliminary injunction, on the ground that the award to which the applicant
may be entitled in arbitration may be rendered ineffectual without provisional
relief. Unless mutually agreed by the parties otherwise, any arbitration shall
take place in Las Vegas, Nevada.

8.2 Selection of Arbitrator. In the event the parties are unable to agree upon
an arbitrator, the parties shall select a single arbitrator from a list of nine
arbitrators drawn by the parties at random from the “Independent” (or “Gold
Card”) list of retired judges or, at the option of Executive, from a list of
nine persons (which shall be retired judges or corporate or litigation attorneys
experienced in executive employment agreements) provided by the office of the
American Arbitration Association having jurisdiction over Las Vegas, Nevada. If
the parties are unable to agree upon an arbitrator from the list so drawn, then
the parties shall each strike names alternately from the list, with the first to
strike being determined by lot. After each party has used four strikes, the
remaining name on the list shall be the arbitrator. If such person is unable to
serve for any reason, the parties shall repeat this process until an arbitrator
is selected.

8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve
any disputes by binding arbitration shall extend to claims against any parent,
subsidiary or affiliate of each party, and, when acting within such capacity,
any officer, director, stockholder, employee or agent of each party, or of any
of the above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common law.
In the event of a dispute subject to this paragraph the parties shall be
entitled to reasonable discovery subject to the discretion of the arbitrator.
The remedial authority of the arbitrator (which shall include the right to grant
injunctive or other equitable relief) shall be the same as, but no greater than,
would be the remedial power of a court having jurisdiction over the parties and
their dispute. The arbitrator shall, upon an appropriate motion, dismiss any
claim without an evidentiary hearing if the party bringing the motion
establishes that he or it would be entitled to summary judgment if the matter
had been pursued in court litigation. In the event of a conflict between the
applicable rules of the American Arbitration Association and these procedures,
the provisions of these procedures shall govern.

 

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8.4 Fees and Costs. Any filing or administrative fees shall be borne initially
by the party requesting arbitration. The Company shall be responsible for the
costs and fees of the arbitration, unless Executive wishes to contribute (up to
50%) of the costs and fees of the arbitration. Notwithstanding the foregoing,
the prevailing party in such arbitration, as determined by the arbitrator, and
in any enforcement or other court proceedings, shall be entitled, to the extent
permitted by law, to reimbursement from the other party for all of the
prevailing party’s costs (including but not limited to the arbitrator’s
compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written
opinion, and the award shall be final and binding upon the parties. If any of
the provisions of this paragraph, or of this Agreement, are determined to be
unlawful or otherwise unenforceable, in whole or in part, such determination
shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all
conflicts between the parties, including those arising out of statutory claims,
shall be resolved by neutral, binding arbitration. If a court should find that
the arbitration provisions of this Agreement are not absolutely binding, then
the parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.

ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered,
amended or repealed in whole or in part except by the signed written consent of
the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement constitutes the total and complete
agreement of the parties and supersedes all prior and contemporaneous
understandings and agreements heretofore made, including the Current Agreement
which is hereby terminated, and there are no other representations,
understandings or agreements.

9.3 Counterparts. This Agreement may be executed in one of more counterparts,
each of which shall be deemed and original, but all of which shall together
constitute one and the same instrument.

9.4 Severability. Each term, covenant, condition or provision of this Agreement
shall be viewed as separate and distinct, and in the event that any such term,
covenant, condition or provision shall be deemed by an arbitrator or a court of
competent jurisdiction to be invalid or unenforceable, the court or arbitrator
finding such invalidity or unenforceability shall modify or reform this
Agreement to give as much effect as possible to the terms and provisions of this
Agreement. Any term or provision which cannot be so modified or reformed shall
be deleted and the remaining terms and provisions shall continue in full force
and effect.

 

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9.5 Waiver or Delay. The failure or delay on the part of the Company, or
Executive to exercise any right or remedy, power or privilege hereunder shall
not operate as a waiver thereof. A waiver, to be effective, must be in writing
and signed by the party making the waiver. A written waiver of default shall not
operate as a waiver of any other default or of the same type of default on a
future occasion.

9.6 Successors and Assigns. This Agreement shall be binding on and shall inure
to the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns, except as otherwise provided herein.
Except as provided in this Section 9.6, without the prior written consent of
Executive, this Agreement shall not be assignable by the Company. The Company
will 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 this Agreement 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. “Company” means the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law
or otherwise.

9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of
the rights, benefits, obligations or duties hereunder may be assigned or
transferred by Executive. Any purported assignment or transfer by Executive
shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts
and execute and deliver any additional agreements, assignments or documents that
may be reasonably necessary to carry out the provisions or to effectuate the
purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the
parties shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Nevada.

9.10 Notices. All notices, requests, demands and other communications to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service, if personally served on the party to whom
notice is to be given, or 48 hours after mailing, if mailed to the party to whom
notice is to be given by certified or registered mail, return receipt requested,
postage prepaid, and properly addressed to the party at his address set forth as
follows or any other address that any party may designate by written notice to
the other parties:

 

To Executive:

   Anthony M. Sanfilippo    At the address in the Company’s records

To the Company:

   Pinnacle Entertainment, Inc.    3980 Howard Hughes Parkway    Las Vegas,
Nevada 89169    Attn: General Counsel    Telephone: 702 541-7777    Facsimile:
702 541-7773

 

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9.11 Headings and Captions. The headings and captions used herein are solely for
the purpose of reference only and are not to be considered as construing or
interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed
in such a manner that shall give effect to the fullest extent possible to the
express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider
seeking the advice of counsel in connection with the execution of this Agreement
and Executive has had an opportunity to do so. Executive has read and
understands this Agreement, and has sought the advice of counsel to the extent
he has determined appropriate. The Company shall reimburse Executive for the
reasonable fees and expenses of Executive’s counsel in connection with this
Agreement not to exceed $10,000.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may
deduct and withhold from the compensation or other amounts payable to Executive
hereunder or otherwise in connection with Executive’s employment any amounts
required to be deducted and withheld by the Company under the provisions of any
applicable Federal, state and local statute, law, regulation, ordinance or
order.

9.15 References to Sections of the Code. All references in this Agreement hereto
to sections of the Code shall be to such sections and to any successor or
substantially comparable sections of the Code or to any successor thereto.

9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or the Company may have hereunder, including without limitation
the right of Executive to terminate employment for Good Reason pursuant to
Section 6.4, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

 

THE COMPANY

    PINNACLE ENTERTAINMENT, INC.     By:  

/s/ John A. Godfrey

      John A. Godfrey       Executive Vice President, General Counsel       and
Secretary

EXECUTIVE

    ANTHONY M. SANFILIPPO    

/s/ Anthony M. Sanfilippo

 

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APPENDIX A

POLICY ON RECOVERY OF INCENTIVE COMPENSATION

IN EVENT OF FINANCIAL RESTATEMENT

The following rules shall apply if (1) there is a restatement of the Company’s
financial statements for the fiscal year for which a bonus is paid, other than a
restatement due to changes in accounting principles or applicable law, (2) the
restatement results in whole or in part from the negligence, misconduct or
malfeasance of the participant, and (3) the Compensation Committee determines
that a participant has received an “excess bonus” for the relevant fiscal year.

 

  1. The amount of the excess bonus shall be equal to the difference between the
bonus paid to the participant and the payment or grant that would have been made
based on the restated financial results.

 

  2. The requirement to repay all or a portion of the excess bonus as determined
by the Compensation Committee shall only exist if the Audit Committee has taken
steps to consider restating the financials prior to the end of the third year
following the year in question.

 

  3. The Compensation Committee may take such action in its discretion that it
determines appropriate to recover all or a portion of the excess bonus if it
deems such action appropriate under the facts and circumstances. Such actions
may include recovery of all or a portion of such amount from the participant
from any of the following sources: prior incentive compensation payments, future
payments of incentive compensation, cancellation of outstanding Equity Awards,
future Equity Awards, gains realized on the exercise of stock options, and
direct repayment by the participant. Participant’s receipt of the bonus
constitutes his agreement that, if requested by the Compensation Committee, he
shall repay to the Company the excess bonus (or that portion thereof specified
by the Committee) within 90 days of the time that he is notified by the
Committee of the overpayment. Application of this policy does not preclude the
Company from taking any other action to enforce a participant’s obligations to
the Company, including termination of employment or institution of civil or
criminal proceedings.

This Policy shall be applicable to all incentive compensation paid subsequent to
the adoption of the Policy.

This Policy is in addition to the requirements of Section 304 of the
Sarbanes-Oxley Act of 2002 that are applicable to the Company’s Chief Executive
Officer and Chief Financial Officer.

 

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APPENDIX B

TERMS OF THE RETENTION RSU’s

 

Type of Equity Award

   Restricted stock units

Governing Plan

   The Retention RSU’s will be issued pursuant to the Company’s 2005 Equity and
Performance Incentive Plan, as amended Shares of Company Common Stock Covered   
100,000

Condition to Vesting for all RSU’s, including

Retention RSU’s

   Notwithstanding anything to the contrary in the Company’s equity plans or any
applicable award agreements thereunder, with respect to all of Executive’s
restricted stock unit awards (including without limitation the Retention RSU’s),
whether granted prior to, on or after the Effective Date, (i) if the employment
of Executive is terminated for any reason (other than because of termination due
to Cause) prior to a vesting date, then the award shall immediately cease
vesting, except as described in this Employment Agreement, and (ii) if the
employment of Executive is terminated due to Cause, then the award shall
immediately cease vesting and any shares that have not been transferred to
Executive pursuant to the terms of the award agreement shall be forfeited.

Vesting Schedule

  

100% on the third anniversary of the Effective Date

 

Except as set forth in this Employment Agreement, no portion of the Retention
RSU’s shall vest prior to the third anniversary of the Effective Date.

Accelerated Vesting

  

In the event of a termination of Executive’s employment without Cause by the
Company or termination by Executive for Good Reason (other than in connection
with a Change of Control as contemplated by Section 6.5.4 of this Employment
Agreement) prior to the third anniversary of the Effective Date, then a prorated
portion of the Retention RSU’s shall immediately vest upon the date of
termination of employment in the following amount: the number of units covered
by the Retention RSU’s shall be multiplied by a fraction, the numerator of which
is the number of days from the Effective Date up to but not including the date
of the termination of Executive’s employment and the denominator of which is one
thousand ninety-six (1,096), and that prorated number of units shall vest
(pursuant to Section 6.5.2(c)(iii) of this Employment Agreement).

 

The Retention RSU’s shall immediately become fully vested upon termination of
Executive’s employment as a result of death or Disability (pursuant to Section
6.5.3 of this Employment Agreement) or upon termination of Executive’s
employment without Cause by the Company or termination by Executive for Good
Reason at the time of or within twenty-four (24) months after a Change of
Control (pursuant to Section 6.5.4 of this Employment Agreement).

 

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APPENDIX C

TERMS OF THE RETENTION STOCK OPTION GRANTS

 

Type of Equity Award

   Non-qualified stock options

Governing Plan

   The options will be granted pursuant to the Company’s 2005 Equity and
Performance Incentive Plan, as amended Shares of Company Common Stock Covered   
50,000

Terms of Options

   10 years

Exercise Price per share

   Equal to 100% of the “Fair Market Value” (as defined in the Company’s 2005
Equity and Performance Incentive Plan, as amended) of a share of the Company’s
common stock on the date of grant

Vesting Schedule

  

50% on the fourth anniversary of the Effective Date.

 

50% on the fifth anniversary of the Effective Date.

 

Except as set forth in this Employment Agreement, no portion options shall vest
prior to the applicable anniversary dates referenced above.

Accelerated or Post-Termination Continued Vesting    The options shall be
subject to accelerated or post-termination continued vesting, if any, as
provided in this Employment Agreement.

 

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ANNEX D

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the
undersigned Anthony M. Sanfilippo (“Executive”), for himself and his spouse,
heirs, estate, administrators and executors, hereby fully and forever releases
and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the
“Company”), and each of its subsidiaries and the officers, directors, employees,
attorneys and agents of the Company and each such subsidiary, of and from any
and all claims, demands, causes of action of any kind or nature, in law, equity
or otherwise, whether known or unknown, which Executive has had, may have had,
or now has, or may have, arising out of or in connection with Executive’s
employment with the Company and/or its subsidiaries or the termination of such
employment; provided, however, that nothing contained herein is intended to nor
shall constitute a release of the Company from any obligations it may have to
Executive under any written employment agreement between Executive and the
Company in effect as of the date hereof, or any deferred compensation plan or
arrangement in which Executive participates or any rights of indemnification
under the Company’s Certificate of Incorporation, Bylaws, Indemnity Trust
Agreement, indemnification agreements or the like, or coverage under Director
and Officer Insurance, nor shall it prevent Executive from exercising his
rights, if any, under any such employment agreement or under any stock option,
restricted stock or similar agreement in effect as of the date hereof in
accordance with their terms.

Executive represents and warrants that he has not assigned or in any way
conveyed, transferred or encumbered all or any portion of the claims or rights
covered by this release.

Executive hereby resigns from all positions as an officer, director or employee
of the Company and each of its subsidiaries or affiliates effective the date
hereof and further agrees to execute such further evidence of such resignations
as may be necessary or appropriate to effectuate the foregoing.

        Executed this          day of             , 20    .

 

 

Executive

 

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