Contract analysis

I. Executive Summary The purpose of this memorandum is to advise Priya Narasimhan, in her capacity as General Counsel of Redstone Gaming Corp. ("RGC" or the "Company"), and through her the Compensation Committee of the Board of Directors (the "Compensation Committee" or the "Committee"), chaired by Theodore S. Iglesias, regarding a recommended enhanced compensation package for Chief Financial Officer candidate Marcus

II. Background A. CFO Search Process The need for the current executive recruitment effort arose following the departure of Richard Halvorsen, who served as RGC's Chief Financial Officer from March 2019 until his resignation, effective September 15, 2023. Mr. Halvorsen departed to accept a position as Chief Executive Officer of a privately held hospitality venture, and his departure, while amicable, left a significan

III. Gap Analysis: RGC Initial Offer vs. Pinnacle Crest Reported Offer A. Summary of RGC Initial Offer (November 17, 2023 Term Sheet) The RGC initial offer, as reflected in the November 17, 2023 term sheet and first draft Executive Employment Agreement, included the following principal compensation elements: Base Salary: $650,000 per year. Annual Cash Bonus: Target of 85% of base salary, yielding a target bonus of $5

IV. Recommended Enhanced Compensation Package Based on our analysis of the competitive gap, the Halcyon Meridian benchmarking data, and the practical realities of the negotiation, we recommend the following enhancements to the compensation package for the Compensation Committee's consideration and approval. A. Base Salary Recommendation: Increase the annual base salary from $650,000 to $725,000. This represents an in

V. Severance and Change-in-Control Provisions A. Change-in-Control Severance (Enhanced) The Executive Employment Agreement will include a change-in-control severance provision structured on a "double-trigger" basis, meaning that severance is payable only upon the occurrence of both (i) a change in control of the Company and (ii) a qualifying termination of the executive's employment (i.e., termination without Cause o

VI. Section 280G Analysis and Best-Net Cutback

Section 280G Overview and Approach Consistent with RGC's current executive compensation philosophy and the terms of the Company's existing executive employment agreements, the Executive Employment Agreement with Ellender will not include a Section 280G excise tax gross-up. The elimination of 280G gross-ups has become standard practice among publicly traded companies and is strongly disfavored by proxy advisory firms,

VII. Restrictive Covenant Terms The restrictive covenant provisions in the Executive Employment Agreement remain a central and contentious negotiation point. The following summarizes RGC's position, the Candidate's position, and our recommendation. Non-Competition Period. We recommend that the Compensation Committee maintain the eighteen (18)-month post-termination non-competition period as proposed in all prior draf

VIII. Other Terms A. Title and Reporting Ellender will hold the title of Executive Vice President & Chief Financial Officer and will report directly to Chief Executive Officer Gavin T. Ashford. The reporting relationship will be specified in the Executive Employment Agreement. As noted in Section V.C above, the Candidate's request to include a "change in reporting structure" Good Reason trigger is being held in reser

IX. Budgetary and Proxy Disclosure Considerations The Compensation Committee should be aware of the following budgetary and disclosure implications of the enhanced compensation package. Proxy Statement Disclosure. If Ellender joins the Company and serves as CFO through the end of fiscal year 2024 (or is otherwise determined to be one of the Company's "named executive officers" as defined by SEC regulations), his comp

X. Requested Action: Compensation Committee Authorization Based on the foregoing analysis and recommendations, we respectfully request that the Compensation Committee adopt Resolution CC-2024-002, a draft of which is attached hereto as Appendix B, authorizing the following: (a) Approval of the enhanced compensation package for CFO candidate Marcus J. Ellender as described in this memorandum, including the specific te

XI. Summary Comparison Table The following table provides a comprehensive side-by-side comparison of the principal terms of the initial offer, the recommended enhanced offer, and the reported Pinnacle Crest offer (to the extent known):

XII. Conclusion For the reasons set forth in this memorandum, we recommend that the Compensation Committee approve the enhanced compensation package for CFO candidate Marcus J. Ellender as described herein and adopt Resolution CC-2024-002 to authorize its implementation. The enhanced package represents a meaningful and carefully calibrated increase over the initial offer, with total annual compensation at target risi