Priya,
I am writing to confirm that earlier today we transmitted the revised enhanced Executive Employment Agreement (third draft) and an updated term sheet to Victoria R. Saldana at Harlan & Mosley LLP on behalf of Marcus J. Ellender. The package reflects the enhanced compensation authorization granted by the Compensation Committee under Resolution CC-2024-002, dated January 12, 2024 (chaired by Theodore S. Iglesias), and is directly responsive to the competing offer from Pinnacle Crest Entertainment, Inc. that Ellender's counsel disclosed to us on January 10, 2024.
Below is a summary of the key terms as transmitted.
**Key Economic Enhancements (Initial Offer → Enhanced Offer)**
- **Base Salary:** Increased from $650,000 to $725,000 per year (+$75,000). - **Annual Cash Bonus Target:** Increased from 85% of base salary ($552,500) to 100% of base salary ($725,000). Maximum payout increased to 200% of base salary ($1,450,000). - **Signing Bonus:** Increased from $300,000 to $500,000, subject to pro-rata clawback in the event of voluntary termination within 24 months at a rate of $20,833.33 per month. As you will recall, the clawback window was reduced from 36 months to 24 months in the second draft, and that reduction carries forward here. - **Equity Grants (Initial):** - *RSUs:* Increased from 35,000 to 45,000 shares of RDGM common stock, vesting ratably over three years (15,000 shares per year). Grant date fair value at $38.20/share = $1,719,000. - *PSUs:* Increased from 20,000 to 30,000 target shares, cliff-vesting at the end of a three-year performance period, with a payout range of 0%–200% (0–60,000 shares). Grant date fair value at target = $1,146,000. - *Total initial equity grant value:* $2,865,000 (annualized: approximately $955,000/year). - **Total Annual Compensation at Target:** $725,000 (base) + $725,000 (bonus target) + $955,000 (annualized equity) = **$2,405,000 per year**. Year-one total inclusive of the signing bonus = **$2,905,000**.
The delta from the initial offer is an increase of approximately $502,167 per year, or roughly 26.4%. I want to be candid that the enhanced package at approximately $2.4 million annually at target does not match the reported ~$3.8 million Pinnacle Crest package on a pure dollar-for-dollar basis. However, we believe this represents a very competitive offer, particularly when factoring in RGC's growth trajectory, the proposed start date of February 15, 2024, and the overall benefits structure, and we have framed it accordingly in the transmittal to Ms. Saldana.
**Severance and Change-in-Control Provisions**
- *CIC Severance:* Double-trigger; 2× (base salary + target bonus) = 2 × $1,450,000 = **$2,900,000** upon a qualifying termination within 24 months of a change in control. - *Non-CIC Severance (Without Cause / Good Reason):* 1.5× base salary = **$1,087,500**, plus pro-rata bonus for the year of termination, plus 18 months of COBRA continuation. - *Section 280G:* "Best net" cutback provision (no gross-up), consistent with the Compensation Committee's direction. - *D&O Insurance:* Covered under RGC's existing policy with Pinnacle Investors Indemnity Group.
**Restrictive Covenant Provisions — Maintained**
Consistent with the Compensation Committee's direction and the prior two drafts, the restrictive covenant terms remain unchanged in the enhanced offer:
- Non-competition: 18 months post-termination - Non-solicitation of employees: 24 months post-termination - Non-solicitation of customers/business partners: 18 months post-termination - Geographic scope: United States and any jurisdiction in which RGC operates or has filed gaming license applications - Confidentiality: perpetual
I recognize that the restrictive covenant duration and scope remain a key point of contention with Ellender's counsel. Ms. Saldana has consistently sought a 12-month non-compete limited to Nevada and New Jersey only. However, the Committee's position on maintaining the 18-month period is well-founded given the competitive sensitivity of the CFO role and RGC's multi-jurisdictional gaming operations, and we have held firm on this point in the third draft.
Additionally, equity acceleration upon termination without cause remains pro-rata (not full acceleration as the candidate requested), and the Good Reason definition includes the modest expansion we negotiated in the second draft but does not extend as far as Ms. Saldana proposed.
**Other Terms**
- Relocation allowance: up to $150,000 (Reno to Las Vegas) - Agreement term: 3-year initial term commencing February 15, 2024, with automatic 1-year renewals - Governing law: State of Nevada
**Attachments**
Please find attached: (1) the third draft of the Executive Employment Agreement (*executive-employment-agreement-draft-3-enhanced.docx*) and (2) the updated term sheet reflecting the enhanced terms.
**Next Steps**
I would appreciate it if you and Dean could review the transmittal at your earliest convenience and let me know whether you would like me to follow up directly with Victoria Saldana by phone to discuss any remaining open items — particularly the restrictive covenant provisions, which I expect will be her primary focus in any counter. Given the time-sensitive nature of the situation in light of the Pinnacle Crest competing offer, a prompt response from Harlan & Mosley will be important.
If Ms. Saldana comes back with further counterproposals, I am happy to coordinate a call with you, Dean, and the C&H team to discuss strategy before we respond. In the meantime, Nadia Petrov and James Underwood remain available to turn any further revisions on a short timeline.
Please don't hesitate to reach out if you have any questions.
Best regards,
**Renata Vasquez** Partner Calderwood & Harkness LLP 3900 Howard Hughes Parkway, Suite 800 Las Vegas, NV 89169 T: (702) 555-4100
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