Dear Renata,
I hope this message finds you well. I am writing in connection with the ongoing negotiations regarding the Executive Employment Agreement between Redstone Gaming Corp. ("RGC") and Marcus J. Ellender for the position of Executive Vice President & Chief Financial Officer. I write at the direction of my client to provide what we believe is a material update that warrants your and your client's prompt attention.
Mr. Ellender has recently received a formal offer of employment from Pinnacle Crest Entertainment, Inc. (NYSE: PCEI) for the role of Executive Vice President & Chief Financial Officer. As you may be aware, Pinnacle Crest is a publicly traded gaming, sports betting, and digital entertainment company headquartered in Las Vegas, Nevada — a direct industry peer to RGC. The offer represents a significant opportunity, and Mr. Ellender is carefully evaluating it alongside the RGC opportunity.
While the full details of the Pinnacle Crest offer are subject to confidentiality obligations and I am not at liberty to disclose them in their entirety, I can share that the reported total annual compensation under the Pinnacle Crest offer is approximately $3,800,000. As you know, the current terms reflected in the second draft of the Executive Employment Agreement dated December 15, 2023, contemplate total annual compensation at target of approximately $1,902,833 — consisting of a base salary of $650,000, an annual bonus target of 85% of base salary ($552,500), and annualized equity compensation valued at approximately $700,333. The delta between the two packages is substantial, on the order of $1.9 million annually, and it is a gap that is difficult for Mr. Ellender to overlook as a matter of professional and financial responsibility.
I want to be clear that, despite this competing offer, Mr. Ellender remains genuinely interested in the Redstone opportunity. He views the RGC role as an excellent fit given the company's profile and growth trajectory in the gaming and media entertainment sector, and he has been impressed by the strength of the leadership team, including CEO Gavin Ashford and the Board of Directors. Mr. Ellender's interest in RGC is sincere and well-considered. However, he has a professional obligation to evaluate all opportunities presented to him, and the economic gap between the two offers is one he cannot responsibly disregard.
In light of this development, we respectfully request that RGC and its Compensation Committee reconsider the compensation package currently contemplated by the draft agreement. Specifically, the areas where reconsideration would be most meaningful to Mr. Ellender are the following:
- **Base Salary.** The current proposed base salary of $650,000 falls meaningfully below what the competing offer provides and what the market appears to support for a public-company CFO in the gaming industry. An upward adjustment here would be an important signal of RGC's commitment to a competitive package.
- **Equity Compensation.** The initial RSU grant of 35,000 shares and PSU target of 20,000 shares, while appreciated, may warrant enhancement to bring the total package closer to competitive levels, particularly in light of the Pinnacle Crest offer.
- **Restrictive Covenant Terms.** The 18-month post-termination non-competition period and the broad geographic scope — encompassing the United States and all jurisdictions where RGC operates or has filed gaming license applications — remain a significant concern for Mr. Ellender. A narrower restrictive covenant, both in duration and geographic reach, would make the overall package materially more attractive, particularly given the industry-specific constraints these provisions impose on a senior executive's future career mobility. This remains a critical point for Mr. Ellender alongside the economic terms.
I would also note that the second draft of the agreement dated December 15, 2023, did not address several of the positions raised in our first redline dated December 1, 2023. Our second redline, submitted on January 3, 2024, reiterated and further developed these points. We believe it would be productive for the parties to engage substantively on those outstanding issues as part of any revised proposal.
Mr. Ellender has been asked to respond to Pinnacle Crest within a reasonable timeframe. While I am not conveying a hard deadline, Mr. Ellender would appreciate a response from RGC as promptly as practicable — ideally within the coming days — so that he can make a fully informed decision. I want to emphasize that this communication is not intended as an ultimatum. Rather, it is a good-faith disclosure designed to ensure that all parties have the information necessary to evaluate the path forward constructively.
Finally, we respectfully request that the existence and terms of the competing offer be treated confidentially within RGC and limited to those individuals necessary for the decision-making process — namely, the Compensation Committee, General Counsel, CHRO, and CEO. I am happy to speak by phone at your convenience to discuss any questions you or your client may have, and I am also glad to help arrange a call with both clients' respective teams if that would be helpful in moving the process forward.
Renata, I want to thank you and the Calderwood & Harkness team for the professionalism and constructive approach you have brought to these negotiations throughout. It has been a pleasure working with you on this matter, and I am hopeful that the parties can find a path forward that works for everyone.
Warm regards,
**Victoria R. Saldana** Partner Harlan & Mosley LLP 200 West Liberty Street, Suite 1400 Reno, NV 89501 Tel: (775) 401-8200 Email: vsaldana@harlanmosley.com
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