Document:

Filed by Bowne Pure Compliance

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made this 19th day of August, 2008,
effective as of August 1, 2008 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT, INC.,
a Delaware corporation (the “Company”), and CARLOS A. RUISANCHEZ an individual (“Executive”), with
respect to the following facts and circumstances:

RECITALS

Company desires to continue to employ Executive and to retain Executive as Executive Vice
President, Strategic Planning and Development of Company, on the terms and conditions set forth
herein. Executive desires to be retained by Company in such capacity, on the terms and conditions
and for the consideration set forth below.

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 Executive
Vice President, Strategic Planning and Development of the Company, and Executive hereby accepts
such engagement by the Company upon the terms and conditions specified below.

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 1, 2011,
provided that commencing on August 1, 2010 and as of August 1 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 ninety (90) days prior to the
next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as
the “Term.”

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally
associated with the positions of Executive Vice President, Strategic Planning and Development
subject to the control and supervision of the Company’s Chief Executive Officer (the “Chief
Executive Officer”), and such other executive duties consistent with the foregoing as may be
assigned to him from time to time by the Chief Executive Officer. 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 may rely on the Company’s inside counsel and outside lawyers in
connection with such matters. 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 Chief
Executive Officer 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 in the casino gaming, card club 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.

ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the Company
shall pay Executive an annual base salary, effective as of August 1, 2008, at the rate of not less
than Four Hundred Twenty-Five Thousand Dollars ($425,000) per year during each of the years of the
Term, prorated based on four (4) months for 2008, and prorated for any other partial year; 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’s annual base salary shall be reviewed by the Chief
Executive Officer and, if appropriate, the Compensation Committee of the Board (the “Committee”) at
least annually beginning no more than twelve (12) months from the date hereof and may be increased
(but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the
increased amount shall not be reduced for the remainder of the Term.

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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 in the
discretion of the Chief Executive Officer and, if appropriate, the Committee; provided, however,
that for 2008, Executive’s bonus shall not be less than Sixty-Six Thousand Six Hundred Sixty-Six
Dollars ($66,666), including any deferred amount, and for 2009, Executive’s bonus shall not be less
than Two Hundred Thousand Dollars ($200,000), including any deferred amount. Any such bonus earned
by Executive shall be paid annually within ninety (90) days after the conclusion of the Company’s
fiscal year, except for any portion of the bonus which is subject to required deferral by the
Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses
relative to partial years (or a termination caused by death or disability) shall be prorated.
Executive may also receive special bonuses in addition to his annual bonus eligibility at the
discretion of the Chief Executive Officer and, if appropriate, the Committee.

3.3 Stock Options. As an additional element of compensation to Executive, in
consideration of the services to be rendered hereunder, as of the date hereof, the Company has
granted to Executive options to purchase Two Hundred Thousand (200,000) shares of the Company’s
common stock which have an exercise price equal to the closing price on the Effective Date of this
Agreement. Such options shall vest in four (4) equal consecutive annual installments of
Twenty-Five Percent (25%) each, with the first Twenty-Five Percent (25%) vested on the first
anniversary of the date hereof. The terms and conditions of such options shall be governed by a
stock option agreement. Prior to August 1, 2010 and at appropriate times thereafter (no less
frequently than within forty (40) months of the prior review), the Committee shall review
Executive’s long-term compensation and, in consultation with the Chief Executive Officer, shall
consider granting additional stock options and/or other long term incentive compensation.

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 weeks vacation each calendar
year, without reduction in compensation; provided, however, that for 2008, Executive shall be
entitled to five and one-third weeks vacation without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and
pension plan benefits and any other benefits on the same basis as they are available generally to
other senior executives of the Company under the Company personnel policies in effect from time to
time.

4.3 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 and paid sick leave. In the event that the Company’s group health plan does not
cover the annual physical examination of Executive and Executive’s spouse, if any, or any
pregnancy of Executive’s spouse, if any, the Company shall bear the cost of such examinations
or the medical costs of such pregnancy.

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4.4 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 current policies of directors and officers liability insurance in
accordance with their terms, to the maximum extent of the coverage available for any director or
officer of the Company. The Company shall use commercially reasonable efforts to cause the current
policies of directors and officers liability insurance to be maintained throughout the term of
Executive’s employment with the Company and for such period thereafter as may be necessary to
continue to cover acts of Executive during the term of his employment (provided that the Company
may substitute therefor, or allow to be substituted therefor, policies of at least the same
coverage and amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect). In the event of any merger or other
acquisition of the Company, the Company shall no later than immediately prior to consummation of
such transaction purchase the longest applicable “tail” coverage available under the directors and
officers liability insurance in effect at the time of such merger or acquisition.

4.5 Relocation. Company shall reimburse Executive for normal and reasonable moving
expenses incurred for relocation to Las Vegas in accordance with Company’s relocation policy, a
copy of which has been provided to Executive. 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 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.

ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, 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”).

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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 (except due to substance or alcohol abuse), after having received 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 a
material willful breach of his fiduciary duty to the Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony 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 Death or Disability. Executive’s employment shall terminate automatically if
Executive dies during the Term. If Executive is physically or mentally disabled from the
performance of a major portion of his duties for a continuous period of one hundred eighty (180)
days or greater, which determination shall be made in the reasonable exercise of the Company’s
judgment, the Company may terminate Executive’s employment due to his disability; provided,
however, if Executive’s disability is the result of a serious health condition as defined by the
federal Family and Medical Leave Act (or its Nevada equivalent) (“FMLA”), Executive’s employment
shall not be terminated due to such disability at any time during or after any period of
FMLA-qualified leave except as permitted by FMLA; provided, however, that if Executive is
thereafter terminated due to such disability, his severance benefits shall be reduced by all
compensation paid during the disability period in which FMLA or the Nevada equivalent prevented
termination and the period of extended health and medical coverage continuation shall be reduced by
the length of time of such FMLA covered disability. 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 days after a request for designation of such party, then a physician or psychiatrist
designed by the Clark County Medical Association. The certification of such physician or
psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

6.1.5 Failure To Be Licensed or Approved by Pinnacle’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 one hundred twenty (120) days of the effective date of this Agreement
or such shorter period required by regulatory authorities. If Executive fails to be recommended
for approval and retention by the Compliance Committee or 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,
then the Company may by 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.

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6.2 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 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.

6.3 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 (a) a
material breach of this Agreement by the Company (including without limitation any material
reduction in the authority, duties or responsibilities of Executive, or any relocation of his or
its principal place of business outside the greater Las Vegas metropolitan area (without
Executive’s consent) and the failure of the Company to remedy such breach within thirty (30) days
after written notice (or as soon thereafter as practicable so long as it commences effectuation of
such remedy within such time period and diligently pursues such remedy to completion as soon as
practicable); or (b) a change of control with respect to the Company (a “Change of Control”)
followed by (i) any diminution of Executive’s authority, duties or responsibilities as set forth in
Section 2.1; or (ii) during the first twelve (12) months following a Change of Control, the failure
of the Company to award Executive an annual bonus equal to at least seventy-five percent (75%) of
the average amount of the annualized bonus paid to Executive for the last two (2) full years; or
(iii) Executive’s termination by the Company other than at the end of the Term of this Agreement;
or (iv) termination of his employment by Executive in his sole and absolute discretion at any time
during the twelve (12) months immediately following the first anniversary date of the Change of
Control. For purposes of this Agreement, a “Change of Control” shall mean:

1. 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 1., 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 3(A), 3(B) and
3(C) below.

2. 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.

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3. 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 corporation resulting from such Business
Combination (including without limitation a corporation that, as a result of such transaction, owns
the Company or all or 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

4. Approval by the stockholders of the Company of a complete liquidation or dissolution of the
Company.

6.4 Effectiveness on Notice. 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.

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6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. If this Agreement 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
(together with any accrued interest or earnings thereon) and vacation benefits. 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
the Agreement is terminated for “Cause,” Executive shall not be entitled to receive any payments
other than as specified in this Section 6.5.1, and provided that Executive may exercise any vested
options.

6.5.2 Termination Due to Death or Disability. If the Company terminates Executive due
to death or disability, the following shall apply:

	 	(a)	 	Executive shall be entitled to an amount equal
to the sum of (i) Executive’s annual base salary in effect on the date
of termination; plus (ii) the greater of the amount of Executive’s
bonus (including all deferred amounts) in the year prior to such
termination or the average of the annual bonuses (including all
deferred amounts) paid to Executive in the three (3) consecutive years
prior to the year of termination (the “Bonus Amount”) times (iii) one
hundred fifty percent (150%) of the sum of (i) and (ii) above (the
“Death or Disability Severance Benefit”); provided that in the event of
death, the amount of such Death Severance Benefit shall be reduced by
the amount of any life insurance provided by the Company; and,
provided, further, that the amount of such Disability Severance Benefit
shall be reduced under the circumstances specified in Section 6.1.4 and
in this Section 6.5.2. In addition, Executive shall be entitled to
receive any amounts payable under Section 6.5.1 above and a pro rata
bonus for the year of termination (which bonus shall be calculated by
taking the Bonus Amount and multiplying it by a fraction, the numerator
of which is the number of days in the year in which Executive was
employed before termination and the denominator of which is 365). The
base salary component of the Death or Disability Severance Benefit
shall be payable to Executive or his estate monthly in equal
installments over a period of eighteen (18) months after the
termination of Executive’s employment (the “Death or Disability
Severance Benefit Period”) and the bonus component shall be paid when
bonuses are paid to Company officers relative to the year in question;
provided that if during such period a Change of Control shall occur,
the full amount of any unpaid Death or Disability Severance Benefit
shall be paid to Executive or his estate in a lump sum. If, during the
Disability Severance Benefit Period Executive is able to work in
capacities similar to those for which he is
employed hereunder, he shall have a duty to seek employment and to
advise the Company of all compensation paid or payable to him from
such employment. Such amounts shall reduce the amount of Disability
Severance Benefits payable by the Company hereunder.

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	 	(b)	 	Any outstanding unvested stock options at the
date of termination which would otherwise vest during the eighteen (18)
months following termination shall immediately become vested and may be
exercised in accordance with their terms. The remaining unvested
options shall immediately terminate.

	 	(c)	 	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) under which Executive was 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 (“Health and Disability
Coverage Continuation”). Such health benefits and disability coverage
shall be paid for by the Company to the same extent as if Executive
were still employed by the Company, and Executive, or his Dependents in
the event of his death, will be required to make such payments as
Executive would be required to make if Executive were still employed by
the Company. The benefits provided under this Section 6.5.2(c) shall
continue until the earliest of (a) five (5) years; (b) the date on
which Executive ceases to be disabled during the five (5) year period;
and (c) 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 such group health plan would otherwise begin, coverage
under this Section 6.5.2(c) shall continue (but not beyond the period
described in clause (a) of this sentence) with respect to such
pre-existing condition until such exclusion under such other group
health plan lapses or expires. 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(c),
the obligations of the Company and its Subsidiaries under this Section
6.5.2(c) shall be conditioned upon Executive’s timely making such an
election.

	 	(d)	 	The provisions of Sections 7.4, 7.5, 7.6 and
7.7 shall apply both during and after the termination of the Disability
Severance Benefit Period.

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6.5.3 Termination Without Cause or Termination by Executive for Good Reason Other than in
Connection with a Change of Control. If the Company terminates Executive without Cause or
Executive terminates 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 (the “Base Severance Benefit”) in effect on the date
of termination; plus (ii) the Bonus Amount, excluding any deferred
bonus which was at the Company’s election rather than Executive’s. 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 at the same
time as annual bonuses are paid to Company officers relative to the
year in question. In addition, Executive shall be entitled to receive
any amounts payable under Section 6.5.1 above and a pro rata annual
bonus for the year of termination calculated and payable as provided in
Section 6.5.2(a). 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.

	 	(b)	 	In addition to those already vested, all of
Executive’s outstanding stock options which would have vested in the
eighteen (18) months following termination shall be fully vested and
exercisable as of the date of termination. Any remaining unvested
options shall immediately terminate.

	 	(c)	 	Executive shall also be entitled to receive
Health and Disability Coverage Continuation for himself and his
dependents, as applicable, on the terms provided in Section 6.5.2(c)
above; provided that the maximum continuation period shall be eighteen
(18) months from the date of termination.

	 	(d)	 	The provisions of Sections 7.3, 7.5, 7.6 and
7.7 shall apply from the date of termination, but the provisions of
Section 7.4 (“Covenant Not to Compete”) shall not apply.

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6.5.4 Termination Without Cause or Termination by Executive for Good Reason on or Within
Six (6) Months Prior to or Within the Twenty-Four (24) Months After a Change of Control. If
the Company terminates Executive without Cause or Executive terminates for Good Reason on or within
either six (6) months prior to or within twenty-four (24) months after a Change of Control, or if
Executive terminates in his sole and absolute discretion within the twelve (12) months immediately
following the first anniversary date of a Change of Control, the following shall apply:

	 	(a)	 	The Company shall pay to Executive in lieu of
the Base Severance Benefit, 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 (the “Change of Control Severance
Benefit”) equal to two (2) times Executive’s annual base salary in
effect on the date of termination , plus two (2) times the largest
annual bonus (including all deferred amounts) that was paid to
Executive during the three (3) years preceding the Change of Control;
plus a pro rated bonus for the year of termination (which bonus shall
be calculated by taking the Bonus Amount and multiplying it as provided
in section 6.5.2(a).. In addition to those already vested, all
unvested stock options held by Executive shall be immediately and fully
vested and exercisable by Executive, and (iii) Executive shall also be
entitled to receive any amounts payable under Section 6.5.1, plus a
continuation of health and disability insurance coverage as specified
in Section 6.5.2(c).

	 	(b)	 	The “Covenant Not to Compete” set forth in
Section 7.4 below shall not apply in any respect to Executive (and
Executive’s compliance therewith shall not be a condition to the
Company’s obligations hereunder), and the term of the “No Hire Away
Policy” in Section 7.5 shall be limited to six (6) months from the date
of termination.

	 	(c)	 	Notwithstanding anything contained herein, if a
Change of Control occurs and the Executive’s employment with the
Company is terminated by the Company without Cause prior to the Change
of Control, such termination of employment shall be deemed to occur
after the Change of Control if such termination (i) was at the request
of, or in response to actions taken by, a third party who has taken
steps reasonably calculated to effect the Change of Control or (ii)
occurs within six (6) months before the date of any Change of Control.

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6.5.5 Additional Payments. In the event that any payments that Executive may receive
under this Agreement or otherwise shall constitute a change in control payments under Section 280G
of the Code which would subject Executive to an excise tax under Section 4999 of the Code,
Executive shall be entitled to receive additional tax gross-up payments from the Company as set
forth in Appendix A hereto. Notwithstanding the foregoing provisions of this
Section 6.5.5, if it shall be determined that Executive is entitled to the Gross Up Payment,
but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive
such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”),
then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c),
6.5.3(c) or 6.5(b) under self-insured insurance plans rather than under insurance policies, the
Company shall indemnify Executive for any tax liability he incurs on payment of claims under the
insurance plans that he would not have incurred if the claims had been paid under insurance
policies. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such
that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue
Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on
benefits under this agreement, on all other payments from the Company to Executive in the nature of
compensation, and on the Gross Up Payment itself, and any interest or penalties (other than
interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to
pay taxes shown due on such returns and any tax liability, including interest and penalties,
unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax
position with respect to benefits under this Agreement and all other payments from the Company to
Executive in the nature of compensation as Executive would have been if the Excise Tax had never
been enacted.

6.5.6 I.R.C. Section 409A. Notwithstanding anything in this Agreement to the
contrary, no payment under this Agreement shall be made to Executive at a time or in a form that
would subject Executive to the penalty tax of Section 409A of the Code (the “409A Tax:”). If any
payment under any other provision of the Agreement would, if paid at the time or in the form called
for under such provision, subject Executive to the 409A Tax, such payment (the “Deferred Amount”)
shall instead be paid at the earliest time that it could be paid without subjecting Executive to
the 409A Tax, and shall be paid in a form that would not subject Executive to the 409A Tax. The
Deferred Amount shall accrue simple interest at the prime rate of interest as published by the Bank
of America during the deferral period and shall be paid with the Deferred Amount. The Company will
place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive
equal to the Deferred Amount plus the interest that will accrue thereon.

6.5.7 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. 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 of Options. Except with respect to options granted prior to the
date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10)
year term of such options, or (b) one (1) year after the termination of Executive’s employment with
the Company, regardless of the cause of such termination, except that, in the event of a
termination for “Cause” or Executive’s termination without Good Reason, all vested options will
terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II)
ninety (90) days after the termination. As provided in the stock option agreements, unvested
options will terminate on the termination of Executive’s employment with the Company, except to the
extent that such options become vested as a result of such termination under the terms of the
governing stock option agreement or this Agreement. With respect to options granted prior to the
date hereof, any option exercise extension shall be limited to the maximum amount permitted which
would not trigger a modification under I.R.C. Section 409A.

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 quality, 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 Date of Termination (“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 VI 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. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may
have against the Executive or others, except to the extent of the mitigation and setoff provisions
provided for in this Agreement. 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. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive
may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company,
Executive or others of the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any contest by
Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest
on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Code.

6.9 Release. 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 B and covering such additional matters as may be
reasonably requested by the Company, which release shall not encompass the payments contemplated
hereby.

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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 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 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.

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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 this Agreement is terminated by the Company
for cause under Section 6.1 above, or by Executive, for a reason other than one specified in
Section 6.3 above, then for a period of one year after the effective date of such termination,
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 in the casino
gaming, card club or horseracing business which competes against the Company in any “market” in
which the Company owns or operates a casino, card club or horseracing facility. For purposes of
this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card
club or horseracing facility owned or operated or under construction by the Company.

7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the
normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by
Executive, for a reason other than one specified in Section 6.3 above, then for a period of one (1)
year after the effective date of such termination, 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.

7.6 No Solicitation. During the Term and for a period of one (1) year thereafter, or,
if sooner, for a period of one (1) year after earlier termination of 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, if sooner, for a period of one (1) year after the earlier termination of 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 or card clubs, or knowingly
encourage any such customers to leave the Company’s casinos or card clubs 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.

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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 in the casino, gaming or horseracing
businesses in any market which the Company or its affiliates owns or operates any such business,
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.

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.

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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.

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.

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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 and the stock option agreements between the
Company and Executive constitute the total and complete agreement of the parties and supersede all
prior and contemporaneous understandings and agreements heretofore made, 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.

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 an/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.

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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:
	 	Carlos A. Ruisanchez
	 

	 	 	 	3800 Howard Hughes Parkway
	 

	 	 	 	Las Vegas, NV 89169
	 

	 	 	 	Telephone: 702 784-7777
	 

	 	 	 	Facsimile: 702 784-7773
	 
	 	 	 	 
	 

	 	To the Company:
	 	Pinnacle Entertainment, Inc.
	 

	 	 	 	3800 Howard Hughes Parkway
	 

	 	 	 	Las Vegas, NV 89169
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Telephone: 702 784-7777
	 

	 	 	 	Facsimile: 702 784-7773
	 
	 	 	 	 
	 

	 	with copy to:
	 	Irell & Manella LLP
	 

	 	 	 	1800 Avenue of the Stars, Suite 900
	 

	 	 	 	Los Angeles, CA 90067-4276
	 

	 	 	 	Attn: Al Segel
	 

	 	 	 	Telephone: 310 277 1010
	 

	 	 	 	Facsimile: 310 284 3052

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.

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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 and
Appendix A 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 6.5, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed this
19th day of August 2008 and effective as of August 1, 2008.

	 	 	 	 	 	 	 
	 

	 	EXECUTIVE
	THE COMPANY
	 	 
	 
	 	 	 	 	 	 
	 

	 	CARLOS A. RUISANCHEZ
	PINNACLE ENTERTAINMENT, INC.
	 	 
	 
	 	 	 	 	 	 
	 

	 	/s/ Carlos A. Ruisanchez
	By: 	/s/ John A. Godfrey	 	 
	 

	 	 

	 	 

 John A. Godfrey
	 	 
	 

	 	 	 	Its: Executive Vice President, General Counsel	 	 
	 

	 	 	 	and Secretary
	 	 

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Appendix A

Tax Grossup Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then
Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by Executive of all taxes (excluding any interest, additions, increases or
penalties imposed with respect to such taxes except for interest, additions, increases or penalties
with respect to the Excise Tax), including, without limitation, any income taxes (except for any
interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax
imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position
with respect to the Payment as Executive would have been in if the Excise Tax had never been
enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under
this appendix, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the Company’s independent accounting firm or such other nationally recognized certified
public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive within 15 business days
of the receipt of notice from Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Subject to Section e) below, any Gross-Up Payment, as determined pursuant to this
appendix shall be paid by the Company to Executive within five days of the receipt of the
Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon
the Company and Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.

(c) Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such
claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

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(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
(c), the Company shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim; provided, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of Executive with respect
to which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or any other taxing
authority.

(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment
or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If Executive would
have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that
a taxing authority offset the amount of such refund against other tax liabilities, interest, or
penalties , Executive shall pay the amount of such offset over to the Company, together with the
amount of interest Executive would have received from the taxing authority if such offset had been
an actual refund, promptly after receipt of notice from the taxing authority of such offset.

(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay
over to the Internal Revenue Service for the benefit of Executive all or any portion of the
Gross-Up Payment that it determines in good faith that it is or may be in the future required to
withhold, and Executive hereby consents to such withholding.

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(f) Definitions. The following terms shall have the following meanings for purposes
of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with
any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within
the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or
payable pursuant to this Agreement or otherwise.

Ruisanchez August 2008

 

23

 

APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned
                     (“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 Articles, Bylaws, Indemnity Trust Agreement 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
	 	 

Ruisanchez August 2008

 

24Filed by Bowne Pure Compliance

Exhibit 10.3

PINNACLE ENTERTAINMENT, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (the “Agreement”) is made and entered into as of August 1, 2008,
by and between Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and Carlos
Ruisanchez (“Optionee”).

A. The Board of Directors of the Company has determined that it is to the advantage and best
interest of the Company to grant to Optionee a nonqualified stock option outside of the Pinnacle
Entertainment, Inc. 2005 Equity and Performance Incentive Plan, as amended (the “Option”), to
purchase 200,000 shares of the common stock of the Company (the “Common Stock”) in order to more
closely align Optionee’s interests with those of other stockholders of the Company, and has
approved the execution of this Agreement between the Company and Optionee.

B. The Option granted hereby is not intended to qualify as an “incentive stock option” under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

NOW, THEREFORE, in consideration of the mutual agreements contained herein, Optionee and the
Company hereby agree as follows:

1. Grant and Terms of Stock Option.

1.1 Grant of Option. The Company hereby grants to Optionee the right and option to
purchase, subject to the terms and conditions set forth in this Agreement, all or any part of an
aggregate of 200,000 shares of Common Stock at a purchase price per share equal to $11.35.

1.2 Vesting and Exercisability. Subject to the other provisions of this Agreement,
this Option shall vest and become exercisable with respect to 25% of the shares of Common Stock
subject to this Option on the first anniversary of the date hereof and, on each subsequent
anniversary of the date hereof, shall vest and become exercisable with respect to an additional 25%
of the shares subject hereto so that this Option shall be vested and exercisable with respect to
100% of the shares subject hereto on the fourth anniversary of the date hereof. Notwithstanding
the foregoing:

1.2.1 If, before the fourth anniversary of the date hereof, Optionee dies or
Optionee’s employment with the Company is terminated on account of Optionee’s disability
under Section 6.1.4 of Optionee’s employment agreement with the Company effective as of
even date herewith (the “Employment Agreement”), this Option shall vest as provided in the
Employment Agreement.

1.2.2 If Optionee’s employment with the Company pursuant to the Employment Agreement
is terminated prior to the expiration of the term thereof by the Company without cause (as
such term is used in the Employment Agreement) or by Optionee for good reason pursuant to
Section 6.3 of the Employment Agreement, this Option shall vest as provided in the
Employment Agreement.

 

 

 

1.3 Term of Option. No portion of this Option may be exercised more than ten years
from the date of this Agreement. In the event of termination of Optionee’s employment by or
cessation of Optionee’s services to the Company or any of its subsidiaries for any reason, with or
without cause, including as a result of death or disability within the meaning of Section 6.1.4 of
the Employment Agreement, the portion of this Option that is not vested and exercisable as of the
date of termination or cessation, and that does not become vested by reason of such termination or
cessation, shall be immediately cancelled and terminated. In addition, the portion of this Option
that is vested and exercisable as of the date of termination of Optionee’s employment by or
cessation of Optionee’s services to the Company or any of its subsidiaries shall terminate and be
cancelled as provided in the Employment Agreement.

2. Method of Exercise. 

2.1 Delivery of Notice of Exercise. This Option shall be exercisable by written notice
in the form attached hereto as Exhibit A which shall state the election to exercise this Option,
the number of shares of Common Stock in respect of which this Option is being exercised, and such
other representations and agreements with respect to such shares as may be required by the Company
pursuant to the provisions of this Agreement. Such written notice shall be signed by Optionee (or
by Optionee’s beneficiary or other person entitled to exercise this Option in the event of
Optionee’s death pursuant to Section 3 hereof) and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be accompanied by payment of the
exercise price. This Option shall not be deemed exercised until the Company receives such written
notice accompanied by the exercise price and any other applicable terms and conditions of this
Agreement are satisfied. This Option may not be exercised for a fraction of a share.

2.2 Restrictions on Exercise. No shares of Common Stock will be issued pursuant to
the exercise of this Option unless and until there shall have been full compliance with all
applicable requirements of the Securities Act of 1933, as amended (whether by registration or
satisfaction of exemption conditions), all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then listed and all
applicable requirements of other laws (including, without limitation, state corporations laws,
state securities laws and federal and state tax laws) and of any regulatory bodies having
jurisdiction over such issuance. As a condition to the exercise of this Option, the Company may
require Optionee to make any representation and warranty to the Company as may be necessary or
appropriate, in the judgment of the Board of Directors (or the Compensation Committee thereof (the
“Committee”)), to comply with any applicable laws.

2.3 Method of Payment. Payment of the exercise price shall be made in full at the time
of exercise (a) in cash or by certified check or bank check or wire transfer of immediately
available funds, (b) by delivery of a properly executed exercise notice together with any other
documentation as the Board of Directors (or the Committee) and the Optionee’s broker, if
applicable, require to effect an exercise of the Option and delivery to the Company of the sale or
other proceeds (as permitted by applicable law) required to pay the exercise price, or (c) with the
consent of the Board of Directors (or the Committee) in its discretion, by tendering previously
acquired shares of Common Stock (either actually or by attestation, valued at their then Fair
Market Value) that have been owned for a period of at least six months (or such other period to
avoid accounting charges against the Company’s earnings). In addition, the Board of Directors (or
the Committee) may
impose such other conditions in connection with the delivery of shares of
Common Stock in satisfaction of the exercise price as it deems appropriate in
its sole discretion.

 

- 2 -

 

2.4 No Rights as a Stockholder. Until the stock certificate
evidencing shares of
Common Stock issued
upon exercise of
this Option is
issued (as evidenced
by the appropriate
entry on the books
of the Company or of
a duly authorized
transfer agent of
the Company), no
right to vote or
receive dividends or
any other rights as
a stockholder will
exist with respect
to the shares,
notwithstanding the
exercise of the
Option.

3. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution or to a beneficiary designated by
written designation, and may be exercised during the lifetime of Optionee only by Optionee.
Subject to all of the other terms and conditions of this Agreement, following the death of
Optionee, this Option may, to the extent it is vested and exercisable by Optionee in accordance
with its terms on the date of death, be exercised by Optionee’s beneficiary, estate or other person
who acquired the right to exercise this Option by bequest or inheritance. Notwithstanding the
first sentence of this Section 3, this Option may be assigned, in connection with Optionee’s estate
plan, in whole or in part, during Optionee’s lifetime to one or more family members of Optionee or
to a trust established exclusively for one or more of such family member. Rights under the
assigned portion may be exercised by the person or persons who acquire a proprietary interest in
such Option pursuant to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the Option immediately before such assignment and shall be set forth in
such documents issued to the assignee as the Board of Directors (or the Committee) deems
appropriate. For purposes of this Section 3, the term “family member” means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Optionee’s household (other than a tenant
or employee), a trust in which these persons (or the Optionee) control the management of assets,
and any other entity in which these persons (or the Optionee) own more than 50 percent of the
voting interests. 

4. Restrictions; Restrictive Legends. Ownership and transfer of shares issued pursuant to
the exercise of this Option will be subject to the provisions of, including ownership and transfer
restrictions (including, without limitation, ownership and transfer restrictions imposed by
applicable gaming laws) contained in, the Company’s Certificate of Incorporation, as amended from
time to time, restrictions imposed by applicable laws and restrictions set forth or referenced in
legends imprinted on certificates representing such shares.

 

- 3 -

 

5. Adjustments Upon Changes in Capitalization, Etc.

5.1 Changes in Capitalization. In the event of any merger, reorganization,
consolidation, recapitalization, dividend or distribution (whether in cash, shares or other
property), stock split, reverse stock split, spin-off or similar transaction or other change in
corporate structure affecting the shares of Common Stock or the value thereof, such adjustments and
other substitutions shall be made to this Option as the Board of Directors (or the Committee), in
its sole discretion, deems equitable or appropriate, including such adjustments in the aggregate
number, class and kind of
securities that may be delivered under this Option and in the number, class, kind and option
or exercise price of securities subject to this Option (including, if the Board of Directors (or
the Committee) deems appropriate, the substitution of similar options to purchase the shares of, or
other awards denominated in the shares of, another company) as the Board of Directors (or the
Committee) may determine to be appropriate in its sole discretion; provided, however, that the
number of shares of Common Stock subject to this Option shall always be a whole number.

5.2 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that this Option had not been previously exercised, it
will terminate immediately prior to the consummation of such proposed dissolution or liquidation.
In such instance, the Company may, in the exercise of its sole discretion, declare that this Option
will terminate as of a date fixed by the Company and give Optionee the right to exercise this
Option as to all or any part of the optioned stock, including shares as to which this Option would
not otherwise be exercisable.

5.3 Corporate Transaction. Upon the happening of a “Change of Control” of the Company
(within the meaning of the Employment Agreement), the Company may, in its sole discretion, do one
or more of the following: (i) shorten the period during which this Option is exercisable (provided
that it remains exercisable for at least 30 days after the date notice of such shortening is given
to Optionee); (ii) accelerate the vesting of this Option; (iii) arrange to have the surviving or
successor entity or any parent entity thereof assume this Option or grant a replacement option in
either case with appropriate adjustments in the option prices and adjustments in the number and
kind of securities issuable upon exercise or adjustments so that this Option or its replacement
represents the right to purchase the shares of stock, securities or other property (including cash)
as may be issuable or payable as a result of such transaction with respect to or in exchange for
the number of shares of Common Stock purchasable and receivable upon exercise of this Option had
such exercise occurred in full prior to such transaction; or (iv) (A) to the extent this Option is
vested (including, if applicable, any acceleration of vesting as contemplated in clause (ii)
above), cancel this Option upon payment to Optionee of an amount that is the equivalent of the
excess of the Fair Market Value of the Common Stock (at the effective time of the change in
control) over the exercise price of this Option, such amount to be payable in cash, in one or more
kinds of stock or property (including the stock or property, if any, payable in the transaction) or
in a combination thereof, as the Board of Directors (or the Committee), in its discretion, shall
determine and (B) to the extent this Option is not vested, either cancel this Option upon a
payment to Optionee in the manner set forth in clause (iv)(A) of this sentence, or arrange for the
assumption of this Option in the manner set forth in clause (iii) of this sentence, in the sole
discretion of the Company.

 

- 4 -

 

6. Withholding Taxes. The Company will have the right to take whatever steps the Board of
Directors (or the Committee) deems necessary or appropriate to comply with all applicable federal,
state, local, and employment tax withholding requirements, and the Company’s obligations to deliver
shares of Common Stock upon the exercise of this Option will be conditioned upon compliance with
all such withholding tax requirements. Without limiting the generality of the foregoing, upon the
exercise of this Option, the Company will have the right to withhold taxes from any other
compensation or other amounts which it may owe to Optionee, or to require Optionee to pay to the
Company the amount of any taxes which the Company may be required to withhold with respect to the
shares issued on such exercise. Without limiting the generality of the foregoing, the Board of
Directors (or the Committee) in its discretion may authorize Optionee to satisfy all or part of any
withholding tax liability by (a) having the Company withhold from the shares of Common Stock which
would otherwise be issued on the exercise of an Option that number of shares having a Fair Market
Value, as of the date the withholding tax liability arises, equal to or less than the amount of the
Company’s withholding tax liability, or (b) by delivering to the Company previously-owned and
unencumbered shares of the Common Stock having a Fair Market Value, as of the date the withholding
tax liability arises, equal to or less than the amount of the Company’s withholding tax liability.

7. General.

7.1 Governing Law. This Agreement shall be governed by and construed under the laws
of the state of Delaware applicable to agreements made and to be performed entirely in Delaware,
without regard to the conflicts of law provisions of Delaware or any other jurisdiction.

7.2 Notices. Any notice required or permitted under this Agreement shall be given in
writing by express courier or by postage prepaid, United States registered or certified mail,
return receipt requested, to the address set forth below or to such other address for a party as
that party may designate by 10 days advance written notice to the other parties. Notice shall be
effective upon the earlier of receipt or 3 days after the mailing of such notice.

	 	 	 	 	 
	 

	 	If to the Company:
	 	Pinnacle Entertainment, Inc.
	 

	 	 	 	3800 Howard Hughes Parkway, Suite 1800
	 

	 	 	 	Las Vegas, Nevada 89169
	 

	 	 	 	Attention: General Counsel
	 
	 	 	 	 
	 

	 	If to Optionee:
	 	Carlos Ruisanchez
	 

	 	 	 	3800 Howard Hughes Parkway, Suite 1800
	 

	 	 	 	Las Vegas, Nevada 89169

7.3 Determination of Fair Market Value. “Fair Market Value” means, as of any date,
the value of Common Stock determined as follows:

7.3.1 If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation, the National Market System of NASDAQ, the Fair
Market Value of a share of Common Stock will be the closing sales price for such stock (or
the closing bid, if no sales are reported) as quoted on
that system or exchange (or the system or exchange with the greatest volume of trading
in Common Stock) on the day of determination (if the day of determination is not a market
trading day, then on the last market trading day that is prior to the day of
determination), as reported in the Wall Street Journal or any other source the
Board of Directors (or the Committee) considers reliable.

 

- 5 -

 

7.3.2 If the Common Stock is quoted on the NASDAQ System (but not on the NASDAQ
National Market System) or is regularly quoted by recognized securities dealers but selling
prices are not reported, the Fair Market Value of a share of Common Stock will be the mean
between the high bid and low asked prices for the Common Stock on the day of determination
(if the day of determination is not a market trading day, then on the last market trading
day that is prior to the day of determination), as reported in the Wall Street
Journal or any other source the Board of Directors (or the Committee) considers
reliable.

7.3.3 If the Common Stock is not traded as set forth above, the Fair Market Value will
be determined in good faith by the Board of Directors (or the Committee) with reference to
the earnings history, book value and prospects of the Company in light of market conditions
generally, and any other factors the Board of Directors (or the Committee) considers
appropriate, such determination by the Board of Directors (or the Committee) to be final,
conclusive and binding.

7.4 Community Property. Without prejudice to the actual rights of the spouses as
between each other, for all purposes of this Agreement, Optionee shall be treated as agent and
attorney-in-fact for that interest held or claimed by his spouse with respect to this Option and
the parties hereto shall act in all matters as if Optionee was the sole owner of this Option. This
appointment is coupled with an interest and is irrevocable.

7.5 No Employment Rights. Nothing herein contained shall be construed as an agreement
by the Company or any of its subsidiaries, express or implied, to employ Optionee or contract for
Optionee’s services, to restrict the Company’s or such subsidiary’s right to discharge Optionee or
cease contracting for Optionee’s services or to modify, extend or otherwise affect in any manner
whatsoever the terms of any employment agreement or contract for services which may exist between
Optionee and the Company or any of its subsidiaries.

7.6 Modifications. This Agreement may be amended, altered or modified only by a
writing signed by each of the parties hereto.

7.7 Application to Other Stock. In the event any capital stock of the Company or any
other corporation shall be distributed on, with respect to, or in exchange for shares of Common
Stock as a stock dividend, stock split, reclassification or recapitalization in connection with any
merger or reorganization or otherwise, all restrictions, rights and obligations set forth in this
Agreement shall apply with respect to such other capital stock to the same extent as they are, or
would have been applicable, to the shares on or with respect to which such other capital stock was
distributed.

7.8 Additional Documents. Each party agrees to execute any and all further documents
and writings, and to perform such other actions, which may be or become reasonably necessary or
expedient to be made effective and carry out this Agreement.

 

- 6 -

 

7.9 No Third-Party Benefits. Except as otherwise expressly provided in this
Agreement, none of the provisions of this Agreement shall be for the benefit of, or enforceable by,
any third-party beneficiary.

7.10 Successors and Assigns. Except as provided herein to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties, their respective
successors and permitted assigns.

7.11 No Assignment. Except as otherwise provided in this Agreement, Optionee may not
assign any of his rights under this Agreement without the prior written consent of the Company,
which consent may be withheld in its sole discretion. The Company shall be permitted to assign its
rights or obligations under this Agreement, but no such assignment shall release the Company of any
obligations pursuant to this Agreement.

7.12 Severability. The validity, legality or enforceability of the remainder of this
Agreement shall not be affected even if one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable in any respect.

7.13 Equitable Relief. Optionee acknowledges that, in the event of a threatened or
actual breach of any of the provisions of this Agreement, damages alone will be an inadequate
remedy, and such breach will cause the Company great, immediate and irreparable injury and damage.
Accordingly, Optionee agrees that the Company shall be entitled to injunctive and other equitable
relief, and that such relief shall be in addition to, and not in lieu of, any remedies it may have
at law or under this Agreement.

7.14 Arbitration.

7.14.1 General. 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 Section 7.14 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 the City of Las Vegas, Nevada.

7.14.2 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 Optionee, from a list of nine persons (which shall be retired judges or corporate or
litigation attorneys experienced in stock options and buy-sell 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.

 

- 7 -

 

7.14.3 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 judgement 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.

7.14.4 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 Optionee 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.

7.14.5 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.

7.15 Headings. The section headings in this Agreement are inserted only as a matter
of convenience, and in no way define, limit, extend or interpret the scope of this Agreement or of
any particular section.

 

- 8 -

 

7.16 Number and Gender. Throughout this Agreement, as the context may require, (a)
the masculine gender includes the feminine and the neuter gender includes the masculine and the
feminine; (b) the singular tense and number includes the plural, and the plural tense and number
includes the singular; (c) the past tense includes the present, and the present tense includes the
past; (d) references to parties, sections, paragraphs and exhibits mean the parties, sections,
paragraphs and exhibits of and to this Agreement; and (e) periods of days, weeks or months mean
calendar days, weeks or months.

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

7.18 Complete Agreement. This Agreement and the Employment Agreement constitute the
total and complete agreement of the parties and supersede all prior and contemporaneous
understandings and agreements heretofore made, and there are no other representations,
understandings or agreements.

7.19 Waiver of Jury Trial. TO THE EXTENT EITHER PARTY INITIATES LITIGATION INVOLVING
THIS AGREEMENT OR ANY ASPECT OF THE RELATIONSHIP BETWEEN US (EVEN IF OTHER PARTIES OR OTHER CLAIMS
ARE INCLUDED IN SUCH LITIGATION), ALL OF THE PARTIES WAIVE THEIR RIGHT TO A TRIAL BY JURY. THIS
WAIVER WILL APPLY TO ALL CAUSES OF ACTION THAT ARE OR MIGHT BE INCLUDED IN SUCH ACTION, INCLUDING
CLAIMS RELATED TO THE ENFORCEMENT OR INTERPRETATION OF THIS AGREEMENT, ALLEGATIONS OF STATE OR
FEDERAL STATUTORY VIOLATIONS, FRAUD, MISREPRESENTATION, OR SIMILAR CAUSES OF ACTION, AND IN
CONNECTION WITH ANY LEGAL ACTION INITIATED FOR THE RECOVERY OF DAMAGES BETWEEN OR AMONG US OR
BETWEEN OR AMONG ANY OF OUR OWNERS, AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS.

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

 

- 9 -

 

	 	 	 	 	 
	 	PINNACLE ENTERTAINMENT, INC.

 	 
	 	By:  	/s/ John A. Godfrey
 	 
	 	 	John A. Godfrey, Executive Vice President 	 
	 	 	General Counsel and Secretary 	 
	 
	 	                                                /s/ Carlos Ruisanchez
 	 
	 	Carlos Ruisanchez 	 

 

- 10 -

 

	 	 	 	 	 

SPOUSAL CONSENT

By her signature below, the spouse of the Optionee agrees to be bound by all of the terms and
conditions of the foregoing Option Agreement (including those relating to the appointment of the
Optionee as agent for any interest that Spouse may have in the shares of Common Stock, which are
subject to the Options).

	 	 	 	 	 
	 

	 	OPTIONEE’S SPOUSE	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 
	 
	 	 	 	 
	 

	 	 

Print Name
	 	 

 

- 11 -

 

EXHIBIT A

NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION

Pinnacle Entertainment, Inc.

3800 Howard Hughes Parkway

Las Vegas, Nevada 89169

Attn: General Counsel

Ladies and Gentlemen:

The undersigned hereby elects to exercise the option indicated below:

Option Grant Date:                     

Number of Shares as to which Option is Being Exercised:                     

Exercise Price Per Share:                     

Total Exercise Price: $                    

Method of Payment:                     

Enclosed herewith is payment in full of the total exercise price.

My exact name, current address and social security number for purposes of the stock
certificate to be issued and the stockholder list of the Company are:

	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 
 	 	 

  	 	 
	 

	 	Address:	 	 	 	 
	 	 	 

  	 	 
	 	 	 

  	 	 
	 

	 	Social Security Number:	 	 	 	 
	 	 	 

  	 	 

Sincerely,

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 
	 	 
	 	 	 	 
	 

	 	 

	 	 
	 	 

(Optionee’s Signature)
	 	 

 

- 12 -

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