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Exhibit 10.6
 
SEPARATION AGREEMENT AND GENERAL RELEASE
 
This Separation Agreement (the "Separation Agreement") is made as of this 3rd day of March, 2011 by and among Pinnacle Entertainment, Inc. (the "Company") and Clifford D. Kortman ("Executive," and together with the Company, the "Parties"). 
 
WHEREAS, Executive has been employed by the Company under terms set forth in the Amended and Restated Employment Agreement dated as of December 22, 2008 as amended by the First Amendment to Amended and Restated Employment Agreement dated December 18, 2009 and the Amendment to Stock Option Agreements and Employment Agreement dated December 22, 2009 by and between Executive and the Company (collectively, the "Employment Agreement");
 
WHEREAS, Executive's employment with the Company will end by Executive's  separation of employment (the "Separation") on March 11, 2011 (the "Separation Date"); and
 
WHEREAS, the Parties desire to enter into this Separation Agreement in order to set forth the definitive rights and obligations of the Parties in connection with the Separation.
 
NOW, THEREFORE, in consideration of the mutual covenants, commitments and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties intending to be legally bound hereby agree as follows:
 
1.     Acknowledgment of Separation. The Parties acknowledge and agree that the Separation will occur on the Separation Date and that the Separation shall be treated as a termination without cause other than in connection with a change of control for all purposes under the Employment Agreement (other than with respect to surviving provisions of the Employment Agreement as set forth below).  In addition, notwithstanding anything to the contrary, the Parties acknowledge and agree that all provisions of the Employment Agreement will terminate effective as of the Separation Date (including specifically, but not limited to, Appendix A relating to tax gross-up payments), with the exception of the provisions of Sections 4.4, 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 9.7, 9.8., 9.14, 9.15  and Article 8 of the Employment Agreement (collectively, the "Surviving Employment Agreement Provisions"), which shall survive the Separation and the effectiveness of this Separation Agreement and will remain in full force and effect after the Separation Date in accordance with their terms, regardless of the reason for this termination of employment.  The post-separation provisions of the Employment Agreement, including specifically Sections 7.3, 7.4, 7.5, 7.6 and 7.7, with respect to periods after the "Term" (as such term is used in the Employment Agreement) shall be considered effective as of and shall run from the Separation Date.  Upon the Separation, Executive shall be treated as having resigned from all positions Executive held with the Company and its subsidiaries, whether as a director, officer, manager or any other position.
 
2.    Executive's Acknowledgment of Consideration.  Executive specifically acknowledges that the obligations and payments set forth in Section 3(a) below were agreed to by the Parties upon entering into the Employment Agreement, and the other obligations and payments of the Company set forth in Section 3 hereof and the release of the Company granted in Section 6 hereof are being provided by the Company in consideration for the release granted by Executive in Section 6 hereof.
 
3.     Payments and Benefits Upon and After the Separation.
 
(a)    Accrued Salary, Expenses and Bonus.  The Company shall pay or cause to be paid to Executive all accrued but unpaid base salary.  In addition, promptly upon submission by Executive of 

 

 

his unpaid expenses incurred prior to the Separation Date as described in Article 5 of the Employment Agreement, reimbursement for such expenses shall be made.  The Company shall pay these amounts within ten (10) days of the Separation Date.  In addition, Executive shall receive an annual bonus for the year 2010 in the amount of Five Hundred Twenty Four Thousand Dollars ($524,000), payable along with other management bonuses no later than March 15, 2011. Executive shall not be eligible for any bonus for the year 2011 or any subsequent year. 
(b)     Severance. The severance to be paid to Executive shall be Executive's annual base salary of Four Hundred Twenty Five Thousand Dollars ($425,000), payable in equal semi-monthly installments over twelve (12) months immediately following the Separation Date in accordance with the Company's regular salary payment schedule from time to time. 
(c)       Stock Options, Restricted Stock and Restricted Stock Units.  All of Executive's vested stock options as of the Separation Date shall survive the Separation Date until the earlier of (i) June 8, 2012 or (ii) the expiration of the original ten-year term of the vested stock options (the “Exercise Period”).  During the Exercise Period, Executive may exercise such vested stock options and any of such stock options which remain unexercised shall expire thereafter and be cancelled and terminated.  All unvested stock options, unvested restricted stock and unvested restricted stock units on the Separation Date are hereby cancelled and terminated. 
 
(d)    Other Stock Unit Awards.  Effective March 1, 2010, Executive was granted Other Stock Unit Awards  covering 22,500 Shares under the Company's 2005 Equity and Performance Incentive Plan (the “Plan”) to vest in two annual equal installments on the first and second anniversaries on the date of the grant (the “2010 Grant”).  Fifty-percent (50%) of the Other Stock Unit Awards  which vested on March 1, 2011 and the 11,250 Shares corresponding to such vested portion of the 2010 Grant shall be issued to Executive within ninety (90) days of the second anniversary of the grant date, subject to the provisions of the 2010 Grant and the Plan.  The remaining portion of the 2010 Grant that would otherwise vest on March 1, 2012 if Executive were still employed is hereby cancelled and terminated.
  
(e)    Other Benefits Payments.  The Company shall pay or make available to Executive all benefits described under Section 6.5.3(c) of the Employment Agreement with respect to "Health and Disability Coverage Continuation" described therein for a maximum period of twelve (12) months from the Separation Date, conditioned upon Executive's timely election of COBRA coverage.  Executive shall promptly advise the Company if he becomes covered under other insurance plans.  Any reimbursement that is taxable to the Executive shall be made not later than December 31 of the calendar year following the calendar year in which Executive or family member incurred the expense.
 
(f)     Tax Withholding.  The Company shall be entitled to withhold from any amounts otherwise payable hereunder to Executive any amounts required to be withheld in respect of federal, state or local taxes and Executive shall be responsible for all taxes on amounts received under or related to this Separation Agreement.
(g)    No Duty to Mitigate.  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 Separation.
 
4.    Consulting Services; Cooperation. 
 
(a)    Consulting.  For a period of twelve (12) months beginning on the Separation Date (the "Consulting Period"), the Company will retain Executive to act on a part-time basis as an independent consultant (for no additional compensation), as reasonably directed by the Company, in assisting the Company as determined in the discretion of the Chief Executive Officer, including, but not limited to the 

 

 

Company's Baton Rouge project.  If Executive takes another executive position during the Consulting Period (subject to his non-competition restrictions as set forth in Section 7.4 of his employment agreement), Executive shall have the right to terminate his obligation to provide consulting services upon written notice to the Company.  Executive shall make himself reasonably available during the Consulting Period, but the parties agree that said commitment shall not exceed twenty-five (25) hours per month.  The Company expressly agrees that Executive shall only be liable for breach of Executive's obligations under this Section 4(a) to the extent Executive engages in gross negligence or willful misconduct with respect to those services and, in such event, the Company expressly agrees that it shall not be entitled to seek money damages in excess of $10,000 for all such breaches.
 
(b)    Reimbursement of Expenses; Independent Contractor Status.  The Company agrees to reimburse Executive for all reasonable out-of-pocket costs and expenses incurred in connection with the consulting services provided under this Section upon presentation of appropriate documentation thereof.  In connection with the Executive's activities on behalf of the Company as an independent consultant pursuant to this Section, Executive acknowledges and agrees that he is acting as an independent contractor, engaged in the conduct of  his own separate business and is not a partner, joint venturer, an agent or employee of the Company for any purpose.   Executive also acknowledges and agrees that Executive has no right or authority or ability to enter into any contracts or assume any obligations or give any warranties or make any representations on behalf of the Company or to bind the Company in any way, and Executive will not convey or represent that he has any such authority. Executive agrees that, other than the consulting services described in this Section, Executive will not otherwise hold himself out as acting for or on behalf of the Company.  The Company shall indemnify and hold Executive harmless from any claim or liability arising from actions taken by Executive in good faith in performing the services required under this Section 4 , including any costs of defense or attorney's fees; provided that (1) the Company shall have the right, at its expense, to assume or participate in the defense of any claim or action covered by such indemnity, (2) the Company shall not be liable for any settlement or compromise of any claim or action covered by such indemnity unless the Company has consented in writing to such settlement or compromise (which consent shall not be unreasonably withheld) and (3) the Company shall not be liable under this indemnity to the extent that it is determined in a final judgment by a court of competent jurisdiction or final arbitration proceeding that such claim or liability resulted from any acts or failures to act undertaken or omitted to be taken by Executive through his gross negligence or willful misconduct.
 
                        (c)   Cooperation.  Executive also agrees to  cooperate with the Company and its attorneys in any current or future litigation or claims involving the Company or any of its subsidiaries in which Executive might be a witness or for which Executive may have material information including, but not limited to, any and all meetings, depositions, arbitrations, mediations, trials, etc.  This cooperation obligation shall be limited to forty (40) hours per year and it shall expire on March 11, 2014.
 
5.     Confidential Information; Prohibitions on Certain Actions by Executive; Cooperation.
 
(a)    Disclosure of Separation Agreement.  In addition to and without limiting the provisions of Section 7.1 of the Employment Agreement, the Executive shall, and the Company agrees to cause each of the Chief Executive Officer, Chief Financial Officer, General Counsel and any executive and senior vice president of the Company (the "Designated Company Executives") to, keep this Separation Agreement, and the terms and subject matter hereof, strictly confidential, and no disclosure or public announcement will be made by any of them (except as required by applicable law, including but not limited to any securities laws and the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC")) with respect to this Separation Agreement (including the existence thereof, or the terms or subject matter hereof) without the prior agreement of the other Party; provided, however, that 

 

 

(i) the Company may issue a mutually agreed upon press release announcing Executive's departure and from time to time may comment on, or make public disclosures regarding, the Separation in a manner consistent with such press release; (ii) the Company and Executive may provide this Separation Agreement to and share such information with applicable gaming regulatory authorities; and (iii) the Company and Executive may share such information with their legal, tax and accounting advisors.  Executive agrees to direct all inquiries concerning Executive's employment with the Company to the Company's Chief Executive Officer or General Counsel, who will represent that Executive resigned to pursue other opportunities.  Executive acknowledges that the Company intends to file this Separation Agreement with the SEC as an exhibit to its periodic reports filed with the SEC and to describe its terms in its SEC filings.  The Company acknowledges that Executive may disclose the existence of this Separation Agreement and any details related thereto to the extent that such information has been filed by the Company with the SEC or if the Company has otherwise released such information to the public.
 
(b)    Prohibition on Certain Actions by Executive.  Executive acknowledges that, given Executive's position with the Company prior to the Separation, Executive possesses substantial non-public information and other confidential information regarding the Company which has substantial economic value to the Company, including without limitation information relating to the Company's development plans, prospects, and financial, organizational, managerial, administrative, customer and marketing information regarding the Company, much of which the Company considers highly sensitive information.  Executive has agreed, pursuant to Section 7.1 of the Employment Agreement, to, among other things, not directly or indirectly disclose, divulge, communicate, use or otherwise disclose any such information.  In order to better ensure that such information is not used inappropriately by Executive, in addition to Executive's obligations under Section 7.1 of the Employment Agreement, which survives the Separation and the effectiveness of this Separation Agreement, for a period of three (3) years from the Separation Date, Executive shall not, nor shall it permit any Affiliate or Associate (as such terms are hereinafter defined) or representative of Executive (such Affiliates, Associates and representatives, collectively and individually, the "Executive Affiliates") to, directly or indirectly:
(i)  effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in:
                 (1)  any solicitation of proxies or written consents of stockholders, or conduct any other type of referendum (binding or non-binding) with respect to, or from the holders of, the common stock of the Company (the "Common Stock") (other than by voting his or its shares of Common Stock in a way that does not violate this Separation Agreement), or become a participant in any contested solicitation with respect to the Company, including without limitation relating to the removal or the election of directors of the Company or seek representation on the Company's Board of Directors or a change in the composition or size of the Company's Board of Directors; 
(2)  any acquisition of any securities (or beneficial ownership thereof) or assets of the Company or any of its subsidiaries (other than the exercise by Executive of stock options held by Executive as of the Separation Date , and excluding personal, passive investments by Executive in the Company's securities from time to time),
(3)  any tender or exchange offer, merger or other business combination involving the Company or any of its subsidiaries, or
(4)  any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries; or

 

 

           (ii)  form, join or participate in a partnership, limited partnership, limited liability company, syndicate, person or other group, including without limitation a group as defined under Section 13(d) of the Exchange Act (as defined below), with respect to the Common Stock, or otherwise assist, support or participate in any effort by any person with respect to the matters set forth in subparagraph (i) above, or deposit any shares of Common Stock in a voting trust or subject any shares of Common Stock to any voting agreement;
(iii)  otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company;
(iv)  publicly announce any intention to take any action, or take any action which might force the Company to make a public announcement, in either case,  regarding any of the types of matters set forth in subparagraph (i) above; or
(v)  enter into any discussions or arrangements with any person with respect to any of the foregoing (including the matters set forth in subparagraph (i) above).
Executive also agrees, on behalf of itself and its Affiliates, Associates and representatives, not to request the Company (or its directors, officers, employees or agents), directly or indirectly, to amend or waive any provision of this Section 8 (including this sentence).
(c)    For purposes of this Agreement:  the terms "Affiliate" and "Associate" shall have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (except that the 10% threshold in the definition of "Associate" shall be replaced with 1% and beneficial ownership under such definition shall include the right to acquire securities whether such right is exercisable immediately or only after the passage of time or only after satisfaction of conditions); and the terms "person" or "persons" shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.
 
6.     Executive Release and Waiver.
 
(a)     Executive Release. Executive, for and on behalf of himself and each of his heirs, executors, administrators, personal representatives, successors and assigns (the "Releasors"), to the maximum extent permitted by law, hereby fully and forever releases, acquits and discharges the Company, together with its subsidiaries, parents and affiliates, and each of their past and present direct and indirect stockholders, directors, members, partners, officers, employees, attorneys, agents and representatives, and their heirs, executors, administrators, personal representatives, successors and assigns (collectively, the "Releasees"), from any and all claims, demands, suits, causes of action, liabilities, obligations, judgments, orders, debts, liens, contracts, agreements, covenants and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, vested or contingent, in law or equity, existing by statute, common law, contract or otherwise, which have existed, may exist or do exist, through and including the execution and delivery by Executive of this Separation Agreement, including, without limitation, any of the foregoing arising out of or in any way related to or based upon: 
 
(i)     Executive's application for and employment with the Company, his being an officer, director or employee of the Company or any of its subsidiaries, or the Employment Agreement or the Separation; 
 
(ii)     any and all claims in tort or contract, and any and all claims alleging breach 

 

 

of an express or implied, or oral or written, contract, policy manual or employee handbook;
 
(iii)    any alleged misrepresentation, defamation, interference with contract, intentional or negligent infliction of emotional distress, sexual harassment, negligence or wrongful discharge; or
 
(iv)    any federal, state or local statute, ordinance or regulation, including but not limited to the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act and Women's Equity Act of 1991; Sections 1981 through 1988 of Title 42 of the United States Code; the Equal Pay Act of 1963, as amended; the Occupational Safety and Health Act of 1970; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Consolidated Omnibus Budget Reconciliation Act of 1985; the Vocational Rehabilitation Act of 1973; the Worker Adjustment Retraining and Notification Act of 1988; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act and the National Labor Relations Act, as amended, and the Older Workers Benefit Protection Act.
                                     
(b)    Exceptions to Executive Release. Notwithstanding any other provision of this Separation Agreement to the contrary, the release by the Executive does not: (i) limit in any way the Executive's rights under this Separation Agreement and under the Surviving Employment Agreement Provisions, (ii) release any rights under applicable law which cannot be waived or released pursuant to any agreement, (iii) release any rights Executive may have to indemnification under the bylaws or governing documents of the Company or any of its subsidiaries or under applicable law, or (iv) release any rights Executive may have as a direct insured under the Company's directors' and officers' liability insurance policies.
 
(c)    Current or Pending Claims of any Kind and No Relief for Released Claims. Executive and Releasors have not and as of the date of this Separation Agreement will not have filed any civil action, suit, arbitration, administrative charge or legal proceeding against any Releasee, nor has the Executive or any Releasor assigned, pledged or hypothecated any claim as of the Separation Date to any person and no other person has any interest in the claims that Executive or any Releasor is releasing herein. Executive agrees that should any person or entity file or cause to be filed any civil action, suit, arbitration or other legal proceedings seeking equitable or monetary relief concerning any claim released by Executive, neither Executive nor any Releasor will seek or accept any personal relief from or as the result of any action, suit or arbitration or other legal proceeding.
 
(d)    Effect of Executive Release and Waiver.  Executive understands and intends that this Section 6 constitutes a general release of all claims except as otherwise provided in Section 6(b), above, and that no reference therein to a specific form of claim, statute or type of relief is intended to limit the scope of such general release and waiver.
 
(e)    Executive Waiver of Unknown Claims.  Executive or any Releasor may hereafter discover claims or facts in addition to or different than those which he now knows or believes to exist with respect to the subject matter of this Separation Agreement and which, if known or suspected at the time of entering into this Separation Agreement, may have materially affected this Separation Agreement and his decision to enter into it; nevertheless, Executive hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts.
 
(f)    ADEA Release.  Executive agrees and expressly acknowledges that this Separation Agreement includes a waiver and release of all claims which Executive has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621, et seq. ("ADEA").  The 

 

 

following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Separation Agreement:
(i)    The waiver and release of claims under the ADEA contained in this Agreement do not cover rights or claims that may arise after the date on which Executive executes and delivers this Separation Agreement to the Company.
(ii)    This Separation Agreement involves consideration in addition to anything of value to which Executive is already entitled.
(iii)    Executive is advised to consult an attorney before signing this Separation Agreement.  If Executive executes this Separation Agreement prior to the expiration of the period specified in Section 6(f)(iv) below, Executive does so voluntarily and after having had the opportunity to consult with an attorney.
(iv)    Executive is granted twenty-one (21) days after Executive is presented with this Agreement to decide whether or not to sign this Separation Agreement.
(v)    Executive will have the right to revoke the waiver and release of claims under the ADEA within seven (7) days after the Separation Date and Executive has reaffirmed this Agreement.  This Section 6(f) shall not become effective or enforceable until that revocation period has expired.  Executive understands and agrees that Executive shall refund any consideration that has been previously paid to Executive, and shall receive no further consideration, if Executive revokes the waiver and release of ADEA claims.
7.    Company Release and Waiver.  The Company, on its behalf, and on behalf of all of its subsidiaries and its and their successors and assigns ("Company Parties"), intending to be legally bound, to the maximum extent permitted by law, hereby fully and forever releases, acquits, and discharges Executive, his heirs, executives, administrators, personal representatives, attorneys, agents, successors and permitted assigns, from any and all liabilities, obligations, judgments, orders, debts, liens, contracts, agreements, covenants and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, vested or contingent, in law or equity, existing by statute, common law, contract or otherwise, which have existed, may exist or do exist, up to and including the execution and delivery by Executive of this Separation Agreement, including, without limitation, any of the foregoing arising out of or in any way related to or based upon all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which the Company ever had, now has, or hereafter may have, by reason of any matter, cause or thing whatsoever up to and including the execution and delivery by Executive of this Separation Agreement, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to Executive's relationship with Company or its subsidiaries as an employee or director, the terms and conditions of that relationship, the termination of that relationship, and any claim that the Executive violated any provision of the Employment Agreement, including, but not limited to, any claims under any federal, state or local common law, statutory, or regulatory provision, now or hereafter recognized. This release is effective without regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort. 
 
(a)    Scope of Company Release.  The Company expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown claims. The Company understands the significance of its release of unknown claims and its waiver of statutory protection against a release of unknown claims.

 

 

 
(b)    Exceptions to Company Release. Notwithstanding any other provision of this Separation Agreement to the contrary, the release by the Company does not: (i) limit in any way the Company's rights under this Separation Agreement and under the Surviving Employment Agreement Provisions, (ii) release any claim based on any other act or omission for which the Company would not have the power to indemnify Executive pursuant to Section 145 of the Delaware General Corporate Law, (iii) release any claim based on any rights under applicable law which cannot be waived or released pursuant to any agreement, or (iv) release any claim to any short-swing trading profits earned by him in violation of the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended.
 
(c)    Current or Pending Claims of any Kind and No Relief for Released Claims. The Company and the other Company Parties have not and as of the date of this Separation Agreement will not have filed any civil action, suit, arbitration, administrative charge or legal proceeding against the Executive, nor have the Company or any of the other Company Parties assigned, pledged or hypothecated any claim as of the Separation Date to any person and no other person has any interest in the claims that the Company and the other Company Parties are releasing herein. The Company and the other Company Parties agree that should any person or entity file or cause to be filed any civil action, suit, arbitration or other legal proceedings seeking equitable or monetary relief concerning any claim released by the Company and the other Company Parties, the Company and the other Company Parties will not seek or accept any personal relief from or as the result of any action, suit or arbitration or other legal proceeding.
 
(d)    Effect of the Company's Release and Waiver. The Company and the other Company Parties understand and intend that this Section 6 constitutes a general release of all claims except as otherwise provided in Section 6(b), above, and that no reference therein to a specific form of claim, statute or type of relief is intended to limit the scope of such general release and waiver.
 
(e)    The Company's Waiver of Unknown Claims. The Company and the other Company Parties may hereafter discover claims or facts in addition to or different than those which they now know or believe to exist with respect to the subject matter of this Separation Agreement and which, if known or suspected at the time of entering into this Separation Agreement, may have materially affected this Separation Agreement and their decision to enter into it; nevertheless, the Company and the other Company Parties hereby waive any right, claim or cause of action that might arise as a result of such different or additional claims or facts.
 
8.     Return of Corporate Property.  Executive hereby covenants and agrees to immediately return all Company files, records and other property in Executive's possession, including such Company property located at Executive's home in Las Vegas, Nevada.
 
9.    Non-Disparagement.  
 
(a)    Executive agrees that from and after the Separation Date, he will not disparage (or induce or encourage others to disparage) the Company, any of its affiliates or any of its or their officers, directors, executives, employees or stockholders.  As used herein, the term "disparage," includes, without limitation, comments or statement to the press, any of the Company's or its affiliates' officers, directors, executives, employees or stockholders or any person with whom the Company or any of its affiliate has a business relationship which is designed to or would reasonably be expected to adversely affect in any manner, the conduct of any of the Company's or any of its affiliates' business or the business or personal reputations of the Company, its affiliates or any of the Company's or its affiliates' officers, directors, executives, employees or shareholders.
 

 

 

(b)       The Company shall not permit the Designated Company Executives to disparage (or induce or encourage others to disparage) Executive.  As used herein, the term "disparage," includes, without limitation, comments or statement to the press, any of the Company's or its affiliates' officers, directors, executives, employees, or stockholders or any person known to the Company to have a business relationship with Executive which is designed to or would reasonably be expected to adversely affect in any manner the conduct of Executive's business or the personal reputation of Executive.
 
10.     Remedies. 
 
(a)    The Parties hereby acknowledge and affirm that in the event of any breach by Executive or the Company of any of the covenants, agreements, and obligations hereunder, monetary damages would be inadequate to compensate the Parties. Accordingly, in addition to other remedies which may be available to the Parties hereunder or otherwise at law or in equity, the Parties shall be entitled to specifically enforce such covenants, obligations and restrictions through injunctive and/or equitable relief, in each case without the posting of any bond or other security with respect thereto. Should any provision hereof be adjudged to any extent invalid by any court or tribunal of competent jurisdiction, each provision shall be deemed modified to the minimum extent necessary to render it enforceable.
 
(b)    Executive hereby acknowledges and affirms that, in the event of a breach by Executive of any of Executive's covenants, agreements, and obligations under this Agreement, in addition to any other remedies which may be available to the Company hereunder or otherwise at law or in equity, the Company shall have the right to terminate any payments due hereunder and to recover of any payments previously made and rights previously granted hereunder.
 
11.    Acknowledgment of Voluntary Agreement. Executive acknowledges that he has entered into this Separation Agreement freely and without coercion, that he has been advised by the Company to consult with counsel of his choice, that he has had adequate opportunity to so consult, and that he has been given all time periods required by law to consider this Separation Agreement, including but not limited to the 21-day period required by the ADEA. 
 
12.     Complete Agreement; Inconsistencies. This Separation Agreement, including the Surviving Employment Agreement Provisions and any other documents referenced herein, constitute the complete and entire agreement and understanding of the Parties with respect to the subject matter hereof, and supersedes in its entirety any and all prior understandings, commitments, obligations and/or agreements, whether written or oral, with respect thereto; it being understood and agreed that this Separation Agreement and including the mutual covenants, agreements, acknowledgments and affirmations contained herein, is intended to constitute a complete settlement and resolution of all matters set forth in Sections 6 and 7 hereof. 
 
13.    409A Additional Tax.  In the event that any compensation with respect to the Executive's termination is "deferred compensation" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder ("Section 409A"), payment of such compensation shall be delayed as required by Section 409A.  Such delay shall last six months from the Separation Date, except in the event of the Executive's death.  Within 30 days following the end of such six-month period, or, if earlier, the Executive's death, the Company will make a catch-up payment to the Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 13.  Wherever 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.
14.    Arbitration.  Except for a claim for injunctive relief, any controversy, dispute, or claim 

 

 

between the Parties arising out of this Separation Agreement shall be settled exclusively by arbitration pursuant to the provisions of Article 8 of the Employment Agreement, and such provision is incorporated herein by this reference.
15.     Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Separation Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application hereto of the laws of any jurisdiction other than the State of Nevada. In furtherance of the foregoing, the internal law of the State of Nevada shall control the interpretation and construction of this Separation Agreement, even though under any other jurisdiction's choice of law or conflict of law analysis the substantive law of some other jurisdiction may ordinarily apply.
 
16.    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:        Clifford D. Kortman
2704 Red Arrow Drive
Las Vegas, NV 89052
            
To the Company:    Pinnacle Entertainment, Inc.    
8918 Spanish Ridge Avenue 
Las Vegas, NV 89148
Attn:  General Counsel 
Telephone:  702 541-7777
Facsimile:  702 541-7773
 
 
17.     Severability. The invalidity or unenforceability of any provision of this Separation Agreement shall not affect the validity or enforceability of any other provision of this Separation Agreement, which shall otherwise remain in full force and effect.
 
18.     Counterparts. This Separation Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
 
19.     Successors and Assigns. The Parties' obligations hereunder shall be binding upon their successors and permitted assigns. The Parties' rights and the rights of the other Releasees shall inure to the benefit of, and be enforceable by, any of the Parties' and Releasees' respective successors and permitted assigns. Executive may not assign any of his rights and obligations under this Separation Agreement, except as may be agreed to in writing by the Company.  The Company may assign all rights and obligations of this Separation Agreement to any successor in interest to the assets of the Company.  In the event that the Company is dissolved, all obligations of the Company under this Agreement shall be provided for in accordance with applicable law.
 
20.     Amendments, Waivers and 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.  No amendment to or waiver of this Separation Agreement or any of its terms shall be binding upon any Party unless consented to in writing by such Party.  
 
21.     Headings. The headings of the sections and subsections hereof are for purposes of convenience only, and shall not be deemed to amend, modify, expand, limit or in any way affect the meaning of any of the provisions hereof. 
 
22.    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.
 
 
23.     Attorneys' Fees.  In the event a Party commences an action to enforce the terms of this Separation Agreement, or for damages for a breach arising out of or relating to this Separation Agreement, the prevailing Party shall be entitled to an award of reasonable attorneys' fees.
 
24.    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.    
25.    Community Property.  Without prejudice to the actual rights of the spouses as between each other, for all purposes of this Separation Agreement, the Executive shall be treated as agent and attorney-in-fact for that interest held or claimed by his spouse with respect to this Agreement.  This appointment is coupled with an interest and is irrevocable.
 
IN WITNESS WHEREOF, the Parties have executed this Separation Agreement effective as of the date of the first signature affixed below or as otherwise provided in this Separation Agreement.
 
DATED:  March 3rd, 2011
 
PINNACLE ENTERTAINMENT, INC.
 
 
By: /s/ Anthony Sanfilippo
Anthony Sanfilippo
President & Chief Executive Officer
 
READ CAREFULLY BEFORE SIGNING
 
I have read this Separation Agreement and have had the opportunity to consult legal counsel and my own tax advisors prior to my signing of this Separation Agreement.  I understand that by executing this Separation Agreement, I will relinquish any right or demand I may have against the Releasees or any of them, unless otherwise provided in this Separation Agreement and/or the surviving terms of my Employment Agreement.
 
DATED: March 3rd, 2011
By: /s/ Clifford D. Kortman
CLIFFORD D. KORTMAN

 

 

 
      
        
SPOUSAL CONSENT
 
By her signature below, the spouse of Clifford D. Kortman agrees to be bound by all of the items and conditions of the foregoing Separation Agreement and General Release (including those relating to the appointment of Clifford D. Kortman as her attorney-in-fact).
 
DATED: March 3, 2011
 
 
By: /s/ Cynthia J. Kortman
       CYNTHIA J. KORTMANWebFilings | EDGAR view

 

 
 
 
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 

 

 

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 

 

 

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 

 

 

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.

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