1033-00005 · Client 1033 · Transaction Documents

initial-term-sheet-ellender.docx DOCUMENT Funds

12 / 12 ← ✕

EXECUTIVE EMPLOYMENT TERM SHEET

CONFIDENTIAL — FOR DISCUSSION PURPOSES ONLY

This Term Sheet is non-binding and is intended solely to outline the principal terms under which Redstone Gaming Corp. ("Company") proposes to employ Marcus J. Ellender ("Executive") as Executive Vice President & Chief Financial Officer. This Term Sheet does not constitute a binding obligation of either party, and neither party shall have any legal obligations to the other with respect to the matters set forth herein unless and until a definitive Executive Employment Agreement is prepared, negotiated, and duly executed by both parties reflecting mutually agreed-upon terms. Until such definitive agreement is executed, either party may withdraw from discussions at any time for any reason or no reason, without liability to the other.

Prepared by: Calderwood & Harkness LLP 3900 Howard Hughes Parkway, Suite 800 Las Vegas, NV 89169

On behalf of Redstone Gaming Corp.

Matter No.: 1033-00005 Date: November 17, 2023

Right-click to update Table of Contents

1. Parties

Employer: Redstone Gaming Corp., a Delaware corporation, with its principal executive offices located at 4100 Sandstone Ridge Boulevard, Las Vegas, Nevada 89119. The Company's common stock is listed on the Nasdaq Global Select Market under the ticker symbol "RDGM." The Company's Employer Identification Number is 88-3204617. Redstone Gaming Corp. is a diversified gaming, hospitality, and entertainment company operating casino resort properties, interactive digital gaming platforms, and related media entertainment businesses across multiple domestic and international jurisdictions.

Executive / Candidate: Marcus J. Ellender, an individual currently residing at 2288 Bristlecone Pines Drive, Reno, Nevada 89511. Mr. Ellender currently serves as Executive Vice President & Chief Accounting Officer of Grandview Resorts International, Inc., a privately held hospitality and gaming company headquartered in Reno, Nevada. Mr. Ellender has served in that capacity since 2018 and has more than twenty years of experience in financial leadership positions within the gaming and hospitality industry. Mr. Ellender holds an active Certified Public Accountant license in the State of Nevada.

2. Position and Title

Title. Executive will be appointed to the position of Executive Vice President & Chief Financial Officer of Redstone Gaming Corp., effective as of the Effective Date set forth in Section 3 below.

Reporting. Executive will report directly to the Chief Executive Officer of the Company, Gavin T. Ashford. No other officer or employee of the Company shall have supervisory authority over Executive except the Chief Executive Officer and the Board of Directors.

Duties. Executive will serve as the principal financial officer of Redstone Gaming Corp. within the meaning of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") promulgated thereunder. In such capacity, Executive will have overall responsibility for and oversight of all financial reporting and disclosure, treasury and cash management operations, tax planning and compliance, accounting and controllership, internal audit, investor relations and capital markets communications, corporate finance and capital allocation, budgeting and financial planning, and risk management functions of the Company and its subsidiaries. Executive will also perform such other duties, consistent with the position of Executive Vice President & Chief Financial Officer, as may be reasonably assigned from time to time by the Chief Executive Officer.

Board Interaction. Executive will attend meetings of the Board of Directors and its committees (including, without limitation, the Audit Committee, the Compensation Committee, and the Finance and Capital Allocation Committee) as requested by the Board or its Chair. Executive will serve as a "principal officer" of the Company for purposes of SEC reporting obligations, including but not limited to certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

Principal Location. Executive's principal place of employment will be the Company's corporate headquarters located in Las Vegas, Nevada. Executive acknowledges that the performance of his duties will require reasonable business travel, both domestic and international, consistent with the needs of the Company and the demands of Executive's position. The Company shall reimburse Executive for all reasonable and documented business travel expenses in accordance with the Company's travel and expense reimbursement policies applicable to senior executive officers.

3. Term of Employment

Effective Date / Proposed Start Date. The proposed effective date of Executive's employment (the "Effective Date") is February 15, 2024, or such other date as the parties may mutually agree upon. The Effective Date is subject to the satisfaction of all conditions precedent to employment set forth in Section 18 of this Term Sheet.

Initial Term. Executive's employment will be for an initial term of three (3) years commencing on the Effective Date and expiring on February 14, 2027 (the "Initial Term"), unless earlier terminated in accordance with the termination provisions set forth in Section 12 below.

Renewal. Following the expiration of the Initial Term, Executive's employment will automatically renew for successive one (1)-year terms (each, a "Renewal Term"), unless either party provides written notice of non-renewal to the other party at least ninety (90) days prior to the expiration of the then-current term (whether the Initial Term or any Renewal Term). Such notice of non-renewal may be given for any reason or no reason.

At-Will Caveat. Notwithstanding the foregoing provisions regarding the Initial Term and any Renewal Term, the employment relationship between the Company and Executive may be terminated at any time, with or without Cause and with or without Good Reason, in accordance with the termination provisions set forth in Section 12 below. The provisions regarding the Initial Term and Renewal Terms are intended to govern the notice requirements for non-renewal and the calculation of certain severance benefits and shall not be construed to guarantee employment for any specific duration.

4. Base Salary

Annual Base Salary. Executive will receive an annual base salary of Six Hundred Fifty Thousand Dollars ($650,000) per year (the "Base Salary"), payable in accordance with Redstone Gaming Corp.'s standard executive payroll practices, which currently provide for payment on a semi-monthly basis (i.e., on the 15th and last business day of each calendar month), less applicable withholdings and deductions required by law.

Annual Review. The Base Salary will be subject to annual review by the Compensation Committee of the Board of Directors (the "Compensation Committee"), with any increases to be determined in the sole discretion of the Compensation Committee. The Compensation Committee will consider, among other factors, the Company's financial performance, Executive's individual performance, competitive market data for similarly situated executives at peer group companies, and such other factors as the Compensation Committee deems relevant. Notwithstanding the foregoing, during the Initial Term, Executive's Base Salary shall not be decreased below Six Hundred Fifty Thousand Dollars ($650,000) without Executive's prior written consent. Any increase in Base Salary during the Initial Term or any Renewal Term shall establish a new minimum Base Salary floor for purposes of this provision.

5. Annual Cash Bonus

Target Bonus. Executive will be eligible to receive an annual cash performance bonus (the "Annual Bonus") with a target amount equal to eighty-five percent (85%) of Executive's then-current Base Salary (the "Target Bonus"). Based on the initial Base Salary of $650,000, the Target Bonus for the first year of employment would be Five Hundred Fifty-Two Thousand Five Hundred Dollars ($552,500).

Maximum Bonus. The maximum Annual Bonus payable to Executive in any fiscal year shall not exceed one hundred seventy percent (170%) of Executive's then-current Base Salary (the "Maximum Bonus"). Based on the initial Base Salary of $650,000, the Maximum Bonus for the first year of employment would be One Million One Hundred Five Thousand Dollars ($1,105,000). The actual Annual Bonus payable to Executive for any given fiscal year may range from zero to the Maximum Bonus, depending on the level of achievement of applicable performance metrics.

Performance Metrics. The Annual Bonus will be based on the achievement of corporate and individual performance objectives established annually by the Compensation Committee in consultation with the Chief Executive Officer. Performance objectives may include, without limitation, financial metrics (such as revenue growth, adjusted EBITDA, net income, free cash flow, and return on invested capital), operational metrics, strategic objectives, and individual performance goals. The Compensation Committee will establish threshold, target, and maximum performance levels for each metric, along with corresponding payout percentages, within the first ninety (90) days of each fiscal year (or, for the first year of employment, within a reasonable period following the Effective Date).

Payment Timing. The Annual Bonus, if earned, will be payable within seventy-five (75) days following the end of each fiscal year in which the bonus is earned. Payment of the Annual Bonus is subject to Executive's continued employment with the Company through the date on which the bonus is paid, except as otherwise expressly provided in the termination and severance provisions set forth in Section 12 below and the change-in-control provisions set forth in Section 13 below.

Year-One Considerations. For fiscal year 2024, Executive's Annual Bonus will be prorated based on the number of days elapsed from Executive's actual start date (expected to be February 15, 2024) through the end of the Company's fiscal year, divided by the total number of days in such fiscal year. The performance metrics applicable to Executive's prorated bonus for fiscal year 2024 will be established by the Compensation Committee as soon as practicable following the Effective Date.

6. Signing Bonus

Amount. In consideration of Executive's acceptance of employment with the Company and to compensate Executive, in part, for the forfeiture of certain compensation and benefits associated with his departure from Grandview Resorts International, Inc., the Company will pay Executive a one-time signing bonus of Three Hundred Thousand Dollars ($300,000) (the "Signing Bonus"). The Signing Bonus will be payable in a lump sum within thirty (30) days of the Effective Date.

Repayment Obligation / Clawback. If Executive voluntarily terminates his employment with the Company other than for Good Reason (as defined in Section 12.3 below), or if Executive's employment is terminated by the Company for Cause (as defined in Section 12.1 below), in either case within thirty-six (36) months of the Effective Date, Executive shall repay the Signing Bonus to the Company on a pro-rata basis. The repayment amount will be calculated as follows: $300,000 divided by 36 months, multiplied by the number of full months remaining in the 36-month period following the date of termination (i.e., $8,333.33 per remaining month). The Company may, at its election, offset any repayment obligation against any amounts otherwise payable to Executive following termination, to the extent permitted by applicable law.

Tax Treatment. The Signing Bonus will be subject to all applicable federal, state, and local tax withholding. No tax gross-up will be provided with respect to the Signing Bonus.

7. Equity Compensation

Executive will receive the following equity-based compensation awards in connection with the commencement of his employment with the Company:

7.1 Restricted Stock Units (RSUs)

Grant. On the Effective Date, the Company will grant to Executive 35,000 restricted stock units (the "RSU Award"), each representing the contingent right to receive one (1) share of Redstone Gaming Corp. common stock (Nasdaq: RDGM) upon vesting and settlement, subject to the terms and conditions of the applicable award agreement and the governing equity incentive plan.

Grant Date. The RSU Award will be granted on the Effective Date, which is expected to be February 15, 2024.

Vesting Schedule. The RSU Award will vest ratably over three (3) years in equal annual installments, subject to Executive's continued employment with the Company through each applicable vesting date. The vesting schedule is as follows:

Estimated Grant Date Fair Market Value. Based on the recent closing price of the Company's common stock of $38.20 per share as of the date of this Term Sheet, the estimated aggregate grant date fair market value of the RSU Award is approximately $1,337,000 (35,000 shares × $38.20/share). The actual grant date fair market value will be determined based on the closing price of the Company's common stock on the Effective Date.

Settlement. Vested RSUs will be settled by delivery of shares of the Company's common stock to Executive (or Executive's designated brokerage account) as soon as administratively practicable following each vesting date, but in no event later than thirty (30) days following the applicable vesting date. Settlement of vested RSUs is subject to applicable tax withholding, which may be satisfied by the Company's withholding of shares having a fair market value equal to the applicable withholding obligation, or by such other method as the Compensation Committee may determine.

Governing Plan. The RSU Award will be granted under the Redstone Gaming Corp. 2022 Omnibus Incentive Plan (or any successor plan thereto), and will be subject to the terms and conditions of such plan and the applicable award agreement to be entered into between the Company and Executive.

7.2 Performance Stock Units (PSUs)

Target Grant. On the Effective Date, the Company will grant to Executive 20,000 performance stock units at target (the "PSU Award"), each representing the contingent right to receive between zero (0) and two (2) shares of Redstone Gaming Corp. common stock upon vesting and settlement, based on the achievement of specified performance metrics over the applicable performance period.

Performance Period. The PSU Award will be subject to a three (3)-year cliff vesting period commencing on February 15, 2024 and ending on February 14, 2027 (the "Performance Period"). No portion of the PSU Award will vest prior to the expiration of the Performance Period, except as otherwise provided in the termination and change-in-control provisions set forth in Sections 12 and 13 below.

Payout Range. The number of shares of Company common stock issuable upon settlement of the PSU Award will range from 0% to 200% of the target number of performance stock units, as follows:

Payout percentages for performance between the threshold, target, and maximum levels will be determined by straight-line interpolation.

Performance Metrics. The specific performance metrics applicable to the PSU Award will be determined by the Compensation Committee. The parties anticipate that the performance metrics will include one or more of the following: (a) relative total shareholder return ("TSR") measured against a defined peer group of publicly traded gaming and hospitality companies, and/or (b) adjusted EBITDA growth over the Performance Period. The Compensation Committee will establish the specific metrics, weightings, threshold, target, and maximum performance levels, and the corresponding payout percentages within a reasonable period following the Effective Date.

Estimated Grant Date Fair Market Value. At target, the estimated aggregate grant date fair market value of the PSU Award is approximately $764,000 (20,000 shares × $38.20/share). The actual grant date fair market value will be determined in accordance with applicable accounting standards (ASC 718) based on the grant date valuation methodology approved by the Compensation Committee.

Settlement. The PSU Award will be settled by delivery of shares of the Company's common stock following certification of performance results by the Compensation Committee, which certification shall occur as soon as practicable following the end of the Performance Period, but in no event later than seventy-five (75) days following the end of the Performance Period. Settlement is subject to applicable tax withholding.

Governing Plan. The PSU Award will be granted under the Redstone Gaming Corp. 2022 Omnibus Incentive Plan (or any successor plan thereto), subject to the terms and conditions thereof and the applicable award agreement.

7.3 Future Equity Awards

Executive will be eligible to receive annual equity awards beginning in fiscal year 2025, at levels and in forms commensurate with similarly situated executive officers of the Company, as determined by the Compensation Committee in its sole discretion. The Compensation Committee will consider competitive market data, individual and corporate performance, and such other factors as it deems appropriate in determining the size, type, and terms of any future equity awards. The Company makes no commitment regarding the grant, amount, or terms of any future equity awards, and nothing in this Term Sheet shall be construed to create any entitlement to future equity awards beyond the RSU Award and PSU Award described in Sections 7.1 and 7.2 above.

8. Total Compensation Summary

The following table summarizes Executive's total annual compensation at target, based on the initial Base Salary and the estimated grant date fair market values of the equity awards described herein:

Year-One Total Compensation at Target:

The foregoing amounts are estimates based on the assumptions stated herein. Actual compensation will depend on, among other factors, the Company's stock price on the applicable grant dates, the achievement of applicable performance objectives, and determinations made by the Compensation Committee.

9. Employee Benefits

Health and Welfare Benefits. Executive and his eligible dependents will be entitled to participate in all health, dental, vision, life insurance, accidental death and dismemberment, short-term disability, long-term disability, and other welfare benefit plans and programs generally available to senior executive officers of the Company, on terms no less favorable than those provided to other similarly situated executives. The Company reserves the right to modify, amend, or terminate any benefit plan or program in its discretion, provided that any such modification, amendment, or termination is applied uniformly to all similarly situated senior executive officers.

Retirement Plans. Executive will be eligible to participate in the Company's 401(k) savings plan, including any employer matching contributions, on the same terms and conditions as other eligible employees. In addition, Executive will be eligible to participate in any nonqualified deferred compensation plan or supplemental executive retirement plan that is or may become available to senior executive officers of the Company, subject to the terms and conditions of such plan.

Paid Time Off. Executive will be entitled to paid time off consistent with the Company's policy for senior executive officers, which currently provides for a minimum of four (4) weeks of paid vacation annually, in addition to Company-observed holidays and personal days. Paid time off will accrue and may be carried over in accordance with the Company's applicable policies.

Executive Perquisites. Executive will be entitled to receive executive perquisites as may be provided from time to time to other C-suite executives of the Company. Current executive perquisites include, without limitation, an annual comprehensive executive health screening, a financial planning and tax preparation allowance, and such other benefits as the Company may establish. The Company reserves the right to modify the executive perquisites program from time to time, provided that any such modifications are applied uniformly to all similarly situated senior executive officers.

10. Relocation Allowance

Amount. The Company will provide Executive with a relocation allowance of up to One Hundred Fifty Thousand Dollars ($150,000) (the "Relocation Allowance") to cover reasonable, documented expenses associated with Executive's relocation from his current residence in Reno, Nevada to the Las Vegas, Nevada metropolitan area.

Covered Expenses. The Relocation Allowance may be applied toward the following categories of expenses, subject to the submission of reasonable documentation and receipts:

(a) Packing, moving, and transportation of household goods and personal effects;

(b) Temporary housing in the Las Vegas metropolitan area for a period of up to ninety (90) days;

(c) Customary closing costs, real estate commissions, title insurance, and related fees associated with the sale of Executive's current residence in Reno, Nevada;

(d) Customary closing costs, origination fees, title insurance, and related fees associated with the purchase of a new primary residence in the Las Vegas metropolitan area;

(e) Travel expenses for house-hunting trips (up to three round trips for Executive and his spouse or domestic partner); and

(f) Related incidental expenses, including utility connection and disconnection fees, storage fees (for up to sixty days), and other miscellaneous costs directly associated with the relocation.

Tax Treatment. Relocation benefits provided under this Section 10 will be subject to applicable federal, state, and local tax withholding. To the extent consistent with the Company's prevailing policy for executive relocations, the Company will provide a tax gross-up payment to Executive to offset the additional income tax liability arising from the taxable portion of the Relocation Allowance, such that Executive is made whole on an after-tax basis for the relocation expenses reimbursed by the Company.

Timing. Executive's relocation to the Las Vegas metropolitan area is to be substantially completed within six (6) months of the Effective Date. The Company and Executive will cooperate in good faith to facilitate a smooth and timely relocation. Requests for reimbursement of relocation expenses must be submitted within twelve (12) months of the Effective Date.

11. Directors' and Officers' Insurance; Indemnification

D&O Insurance. Executive will be covered under the Company's existing directors' and officers' liability insurance policy maintained with Pinnacle Investors Indemnity Group, on the same terms and conditions as other senior executive officers and directors of the Company. The Company will maintain directors' and officers' liability insurance coverage that is reasonable and customary for companies of comparable size and operations in the gaming and hospitality industry.

Tail Coverage. The Company will maintain directors' and officers' liability insurance coverage for Executive for a period of at least six (6) years following the termination of Executive's employment with the Company, with respect to claims arising from acts or omissions occurring during the period of Executive's employment. Such tail coverage may be provided through a run-off policy, an extension of the Company's existing policy, or such other arrangement as the Company determines to be appropriate, provided that the coverage levels are no less favorable than those in effect during Executive's employment.

Indemnification. Executive will be entitled to indemnification and advancement of expenses to the fullest extent permitted by the Company's certificate of incorporation and bylaws (as may be amended from time to time) and applicable Delaware law. The Company and Executive will enter into a separate indemnification agreement on terms substantially consistent with the form of indemnification agreement entered into with other senior executive officers and directors of the Company, providing for indemnification to the maximum extent permitted by Delaware law.

12. Termination Provisions

The definitive Executive Employment Agreement will include detailed provisions governing the termination of Executive's employment, including the definitions, procedures, and consequences set forth below. In the event of any termination of employment, the definitive agreement will set forth the specific mechanics for providing notice, the effective date of termination, and the timing and manner of payments.

12.1 Termination by the Company for Cause

Definition of "Cause." For purposes of this Term Sheet, "Cause" means the occurrence of any of the following, as determined by the Board of Directors (or a committee thereof) in good faith:

(i) Executive's conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, dishonesty, or fraud;

(ii) Executive's willful and continued failure to substantially perform his material duties under the Employment Agreement (other than as a result of physical or mental incapacity), after the Company has delivered written notice to Executive specifying the nature of such failure and Executive has failed to cure such failure within thirty (30) calendar days following receipt of such notice;

(iii) Executive's willful misconduct or gross negligence in the performance of his duties that results, or is reasonably likely to result, in material harm to the Company or its reputation;

(iv) Executive's material breach of his fiduciary duties to the Company;

(v) Executive's material violation of the Company's written policies, including without limitation the Company's Code of Business Conduct and Ethics, insider trading policy, anti-harassment policy, or other material compliance policies; or

(vi) Executive's commission of fraud, embezzlement, or misappropriation of Company funds, assets, or property.

Entitlements on Cause Termination. In the event of a termination of Executive's employment by the Company for Cause, Executive will be entitled to receive only the following (collectively, "Accrued Obligations"): (a) accrued but unpaid Base Salary through the date of termination; (b) reimbursement for any unreimbursed business expenses incurred prior to the date of termination in accordance with the Company's expense reimbursement policy; (c) accrued but unused paid time off through the date of termination, to the extent payable under Company policy; and (d) any vested benefits under the Company's benefit plans in accordance with the terms of such plans. Executive will not be entitled to any severance payment, any Annual Bonus for the fiscal year in which the termination occurs (whether prorated or otherwise), or any acceleration or continued vesting of unvested equity awards. All unvested equity awards will be forfeited as of the date of termination.

12.2 Termination by the Company Without Cause

In the event that the Company terminates Executive's employment without Cause (and other than due to Executive's death or Disability), Executive will be entitled to the following, in addition to the Accrued Obligations:

Severance Payment. A cash severance payment equal to one and one-half times (1.5×) Executive's then-current annual Base Salary. Based on the initial Base Salary of $650,000, the severance payment would be Nine Hundred Seventy-Five Thousand Dollars ($975,000). The severance payment will be payable, at the Company's election, either in a single lump sum within sixty (60) days following the date of termination, or in substantially equal installments over a period of eighteen (18) months following the date of termination, in accordance with the Company's standard payroll practices, less applicable withholdings.

Pro-Rata Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual performance results for the full fiscal year as determined by the Compensation Committee, prorated based on the number of days Executive was employed during such fiscal year. The pro-rata bonus, if earned, will be payable at the same time Annual Bonuses are ordinarily paid to other senior executives of the Company for such fiscal year.

COBRA Continuation. Company-paid COBRA health insurance continuation coverage for Executive and his eligible dependents for a period of eighteen (18) months following the date of termination, or until Executive becomes eligible for comparable health insurance coverage through a subsequent employer, whichever occurs first. If the provision of COBRA subsidies would result in adverse tax consequences to the Company or violate applicable nondiscrimination rules, the Company may instead provide Executive with a taxable monthly cash payment equal to the applicable COBRA premium for the remainder of the 18-month period.

Equity Treatment. Unvested RSUs will vest on a pro-rata basis, calculated based on the number of full months of Executive's employment from the applicable grant date through the date of termination, divided by the total number of months in the original vesting schedule. Unvested PSUs will vest on a pro-rata basis through the date of termination, with the number of shares ultimately issuable determined based on actual performance results at the end of the applicable Performance Period, as certified by the Compensation Committee. Settlement of pro-rata vested PSUs will occur at the same time as PSUs would otherwise have been settled had Executive remained employed through the end of the Performance Period.

Release Requirement. All severance benefits described in this Section 12.2 (other than the Accrued Obligations) are expressly conditioned upon Executive's timely execution and non-revocation of a general release of claims in a form reasonably acceptable to the Company (the "Release"). Executive must execute the Release within the time period specified therein (which shall be no longer than forty-five (45) days following the date of termination), and the Release must become effective and irrevocable in accordance with its terms. If Executive fails to execute the Release within the specified period or revokes the Release within any applicable revocation period, Executive will forfeit all severance benefits and will be entitled only to the Accrued Obligations.

12.3 Resignation by Executive for Good Reason

Definition of "Good Reason." For purposes of this Term Sheet, "Good Reason" means the occurrence of any of the following without Executive's prior written consent:

(i) A material reduction in Executive's Base Salary (other than a reduction of less than ten percent (10%) that is applied uniformly to all senior executive officers of the Company);

(ii) A material diminution in Executive's title, authority, duties, or responsibilities, including a requirement that Executive report to any person other than the Chief Executive Officer or the Board of Directors;

(iii) A relocation of Executive's principal workplace to a location more than fifty (50) miles from the Company's current headquarters in Las Vegas, Nevada; or

(iv) A material breach by the Company of any material provision of the Employment Agreement;

provided, however, that no event shall constitute Good Reason unless: (a) Executive provides written notice to the Company specifying in reasonable detail the condition or event giving rise to Good Reason within sixty (60) days of the initial occurrence thereof; (b) the Company fails to cure such condition or event within thirty (30) calendar days following receipt of such written notice; and (c) Executive actually resigns from employment within thirty (30) calendar days following the expiration of the Company's cure period.

Entitlements. In the event Executive resigns from employment for Good Reason in compliance with the notice and cure procedures described above, Executive will be entitled to the same severance benefits as would be payable upon a termination by the Company without Cause, as set forth in Section 12.2 above, subject to Executive's execution and non-revocation of the Release.

12.4 Resignation by Executive Without Good Reason

In the event Executive voluntarily resigns from employment without Good Reason, Executive will be entitled to receive only the Accrued Obligations. Executive will not be entitled to any severance payment, any Annual Bonus for the fiscal year in which the resignation occurs, or any acceleration or continued vesting of unvested equity awards. All unvested equity awards will be forfeited as of the date of resignation. In addition, the Signing Bonus clawback provisions set forth in Section 6 above shall apply.

12.5 Death or Disability

In the event of Executive's death or Disability, Executive (or Executive's estate or beneficiaries, as applicable) will be entitled to receive the following, in addition to the Accrued Obligations:

Pro-Rata Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual performance results for the full fiscal year (or, at the Compensation Committee's discretion, based on target performance), prorated based on the number of days Executive was employed during such fiscal year.

Equity Acceleration. Full accelerated vesting of all unvested RSUs. All unvested PSUs will vest at the target level (i.e., 100% of the target number of performance stock units).

Definition of "Disability." For purposes of this Term Sheet, "Disability" means Executive's inability, due to physical or mental impairment, to perform the essential functions of his position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days, or for an aggregate of two hundred seventy (270) calendar days within any three hundred sixty-five (365)-day period, as certified by a physician mutually agreed upon by the Company and Executive (or Executive's legal representative).

13. Change-in-Control Provisions

Double-Trigger Structure. Executive will not be entitled to any enhanced severance or accelerated equity vesting solely by reason of a Change in Control. Enhanced severance and equity acceleration will be payable only upon a "qualifying termination," defined as a termination of Executive's employment by the Company without Cause, or a resignation by Executive for Good Reason, occurring within twenty-four (24) months following the effective date of a Change in Control (a "CIC Qualifying Termination").

CIC Severance Amount. In the event of a CIC Qualifying Termination, Executive will be entitled to a lump-sum cash severance payment equal to two times (2×) the sum of (a) Executive's then-current annual Base Salary, plus (b) Executive's Target Bonus for the fiscal year in which the termination occurs. Based on the initial Base Salary and Target Bonus, the CIC severance payment would be calculated as follows: ($650,000 + $552,500) × 2 = $2,405,000. Executive will also be entitled to a pro-rata Annual Bonus for the year of termination (based on target performance, prorated through the date of termination) and Company-paid COBRA continuation coverage for twenty-four (24) months following termination.

Equity Acceleration. Upon the occurrence of a Change in Control, all unvested PSUs will be deemed earned at the target level (100% of the target number of performance stock units), and such PSUs will be converted into time-based RSUs that will vest on the same schedule as Executive's other unvested RSUs. In the event of a CIC Qualifying Termination, all unvested RSUs (including any PSUs converted into time-based RSUs upon the Change in Control) will vest in full immediately upon the date of termination.

Definition of "Change in Control." The term "Change in Control" will be defined in the definitive Executive Employment Agreement and is expected to include the following events:

(i) The acquisition by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) of more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the Company;

(ii) A change in the composition of the Board of Directors such that the individuals who constitute the Board as of the Effective Date (the "Incumbent Board"), together with any new directors whose election or nomination was approved by a vote of at least a majority of the Incumbent Board, cease to constitute a majority of the Board;

(iii) The consummation of a merger, consolidation, reorganization, or similar transaction involving the Company, or the sale or other disposition of all or substantially all of the assets of the Company, unless, immediately following such transaction, the stockholders of the Company immediately prior to such transaction continue to hold at least fifty percent (50%) of the combined voting power of the surviving or acquiring entity; or

(iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

The definition of Change in Control will be drafted to comply with Section 409A of the Internal Revenue Code, to the extent applicable.

Section 280G. No excise tax gross-up will be provided under the Employment Agreement. Instead, the definitive agreement will include a "best net" cutback provision, under which the aggregate payments and benefits payable to Executive that constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code will be reduced to the extent necessary to avoid the imposition of excise taxes under Section 4999 of the Code, but only if such reduction would result in a greater after-tax benefit to Executive than would be realized if the full amount of such payments and benefits were paid and Executive bore the excise tax liability. Any such reduction will be applied in the order that results in the greatest economic benefit to Executive, consistent with Section 409A.

14. Restrictive Covenant Provisions

The definitive Executive Employment Agreement will contain restrictive covenant obligations as material terms of Executive's employment with the Company. Executive acknowledges and agrees that the consideration for such restrictive covenant obligations is embedded within the compensation and severance arrangements described in this Term Sheet, and that compliance with the restrictive covenant provisions set forth below is a condition to Executive's receipt of severance benefits. The following sets forth the anticipated scope and duration of the restrictive covenants:

14.1 Non-Competition. Duration. Eighteen (18) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination (whether by the Company, by Executive, or by reason of the expiration of the term of employment).

Scope. During the restricted period, Executive shall not, directly or indirectly, whether as an employee, officer, director, consultant, advisor, independent contractor, partner, member, owner, investor, or in any other capacity, engage in, be employed by, consult for, manage, operate, control, or own any interest (other than passive investments of less than two percent (2%) of the outstanding publicly traded securities of any entity) in any business or enterprise that competes with the Company's casino gaming, resort operations, interactive digital gaming, or media entertainment businesses.

Geographic Scope. The non-competition restriction will apply throughout the United States and any other jurisdiction in which the Company or any of its subsidiaries or affiliates operates, or in which the Company has filed gaming license applications, as of the date of Executive's termination of employment.

14.2 Non-Solicitation of Employees

Duration. Twenty-four (24) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination.

Scope. During the restricted period, Executive shall not, directly or indirectly, recruit, solicit, hire, or engage, or attempt to recruit, solicit, hire, or engage, or induce or encourage to leave the employ of the Company, any individual who is an employee of the Company or any of its subsidiaries or affiliates, or who was an employee of the Company or any of its subsidiaries or affiliates at any time during the six (6) months immediately preceding such recruitment, solicitation, hiring, engagement, or inducement. This restriction applies regardless of whether the employee would be in violation of any contractual obligation by leaving the Company's employment.

14.3 Non-Solicitation of Customers and Business Partners

Duration. Eighteen (18) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination.

Scope. During the restricted period, Executive shall not, directly or indirectly, solicit, divert, take away, or accept business from, or attempt to solicit, divert, take away, or accept business from, any customer, patron, vendor, supplier, licensee, joint venture partner, or other business partner of the Company or any of its subsidiaries or affiliates with whom Executive had material contact, or about whom Executive received Confidential Information, during the last twenty-four (24) months of Executive's employment with the Company.

14.4 Confidentiality. Duration. Perpetual. Executive's obligations with respect to Confidential Information shall survive the termination of Executive's employment for any reason and shall continue indefinitely.

Scope. Executive shall not, at any time during or after his employment, disclose, use, publish, or otherwise communicate any Confidential Information (as will be defined in the definitive Employment Agreement) of the Company, its subsidiaries, its affiliates, or its business partners, except (a) as required in the faithful performance of Executive's duties on behalf of the Company, (b) as required by applicable law, regulation, or legal process (including a subpoena or court order), provided that Executive provides the Company with prompt written notice of such requirement to the extent permitted by law, or (c) with the prior written consent of the Company. "Confidential Information" is expected to be broadly defined in the definitive agreement to include, without limitation, trade secrets, proprietary data, financial information and projections, business plans, customer and patron data, marketing strategies, gaming analytics, technology and software, intellectual property, regulatory filings and correspondence, and any other information that derives independent economic value from not being generally known to the public or to the Company's competitors.

Whistleblower Carve-Out. Notwithstanding the foregoing, nothing in the confidentiality provisions of the Employment Agreement will prohibit or restrict Executive from (i) reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Equal Employment Opportunity Commission, or any applicable state or local agency, or (ii) making disclosures that are protected under the whistleblower provisions of applicable federal, state, or local law or regulation. Executive is not required to notify the Company prior to making any such report or disclosure. In addition, pursuant to the Defend Trade Secrets Act of 2016, Executive is hereby notified that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a government official or an attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a complaint or other document filed under seal in a lawsuit or other proceeding.

14.5 Restrictive Covenant Remedies

Executive acknowledges that the Company's business is highly competitive and that the restrictions set forth in Sections 14.1 through 14.4 are reasonable and necessary to protect the Company's legitimate business interests, including its Confidential Information, customer and business relationships, and investment in Executive's training and development. Executive further acknowledges that any breach or threatened breach of the restrictive covenant provisions would cause the Company irreparable harm that cannot be adequately compensated by money damages alone, and that the Company would be difficult to calculate the full extent of such damages.

Accordingly, in the event of a breach or threatened breach of any of the restrictive covenant provisions, the Company shall be entitled to seek temporary, preliminary, and permanent injunctive relief, specific performance, and other equitable remedies from any court of competent jurisdiction, without the necessity of posting bond or proving actual damages, in addition to any other remedies available at law or in equity. The seeking of injunctive or equitable relief shall not be construed as a waiver of any other rights or remedies that the Company may have, including the right to recover monetary damages.

Tolling. If Executive breaches any of the restrictive covenant provisions set forth in Sections 14.1, 14.2, or 14.3, the restricted period applicable to such provision shall be extended by a period of time equal to the duration of Executive's violation, such that the Company receives the full benefit of the bargained-for restricted period.

15. Clawback Policy

Executive's incentive-based compensation (including, without limitation, the Annual Bonus, the Signing Bonus, the RSU Award, the PSU Award, and any future equity awards) will be subject to any clawback, recoupment, or forfeiture policy adopted by the Company from time to time, including any policy required under applicable law, the rules and regulations of the Securities and Exchange Commission (including SEC Rule 10D-1), and the listing standards of the Nasdaq Stock Market. The Company has adopted a clawback policy in compliance with Nasdaq Listing Rule 5608, effective as of October 2, 2023, and Executive will be required to acknowledge and agree to be bound by the terms of such policy as a condition of employment.

16. Section 409A Compliance

All payments and benefits under the definitive Executive Employment Agreement will be designed to comply with, or to be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), and the Treasury Regulations and other guidance promulgated thereunder. The definitive agreement will be interpreted and administered in a manner consistent with Section 409A. To the extent that any payment or benefit under the agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A and Executive is a "specified employee" (as defined in Section 409A(a)(2)(B)(i) of the Code) at the time of Executive's "separation from service" (as defined in Section 409A), such payment or benefit will be delayed until the first business day following the six (6)-month anniversary of Executive's separation from service (or, if earlier, Executive's death), and any payments that would otherwise have been made during such six-month period will be accumulated and paid in a lump sum on such date. Each installment payment under the agreement will be treated as a separate payment for purposes of Section 409A.

17. Governing Law and Dispute Resolution

Governing Law. The definitive Executive Employment Agreement will be governed by and construed in accordance with the laws of the State of Nevada, without regard to its conflicts of law principles that would result in the application of the laws of any other jurisdiction.

Dispute Resolution. Except as otherwise provided below, any dispute, claim, or controversy arising out of, relating to, or in connection with the Executive Employment Agreement or Executive's employment with the Company (including the termination thereof) will be resolved through final and binding arbitration, administered by JAMS (or a successor alternative dispute resolution provider) in Las Vegas, Nevada, in accordance with JAMS' then-current Employment Arbitration Rules and Procedures. The arbitration will be conducted before a single arbitrator mutually agreed upon by the parties (or, failing agreement, appointed by JAMS in accordance with its rules). The arbitrator's award will be final and binding on the parties and may be entered as a judgment in any court of competent jurisdiction. Each party will bear its own attorneys' fees and costs, except that the arbitrator may award reasonable attorneys' fees to the prevailing party.

Notwithstanding the foregoing, nothing in the arbitration provision shall preclude the Company from seeking temporary, preliminary, or permanent injunctive relief, or other equitable remedies, in a court of competent jurisdiction to enforce the restrictive covenant provisions set forth in Section 14 of the Employment Agreement or to protect the Company's Confidential Information, trade secrets, or other proprietary rights. The parties consent to the exclusive jurisdiction of the state and federal courts located in Clark County, Nevada for purposes of any such proceedings.

18. Conditions Precedent to Employment

Executive's employment with the Company is contingent upon the satisfaction of each of the following conditions precedent, which must be completed to the Company's reasonable satisfaction prior to or concurrently with the Effective Date:

(a) Definitive Agreement. Negotiation and execution of a definitive Executive Employment Agreement, in form and substance mutually acceptable to the Company and Executive, reflecting the terms set forth in this Term Sheet and such other terms as the parties may agree upon.

(b) Background Check. Satisfactory completion of a comprehensive background check and reference verification, conducted in accordance with the Company's standard pre-employment screening policies for senior executive officers.

(c) Employment Eligibility. Confirmation of Executive's eligibility to work in the United States, as required by the Immigration Reform and Control Act of 1986 and applicable regulations.

(d) Professional Licensure. Verification that Executive holds an active Certified Public Accountant (CPA) license in the State of Nevada (License No. CPA-NV-041882), in good standing and without pending disciplinary proceedings.

(e) Gaming Regulatory Compliance. Compliance with any applicable gaming regulatory requirements, including without limitation the submission of all required applications for gaming employee licenses, key employee licenses, or other approvals as may be required by the Nevada Gaming Control Board, the Nevada Gaming Commission, and the gaming regulatory authorities of any other jurisdiction in which the Company or its subsidiaries hold gaming licenses or operate gaming facilities. Executive acknowledges that the Company's ability to employ him is contingent upon his suitability and licensability under applicable gaming regulations, and Executive agrees to cooperate fully with any regulatory investigations or proceedings.

(f) Resignation from Current Employment. Resignation from Executive's current employment at Grandview Resorts International, Inc. and confirmation, satisfactory to the Company and its counsel, that Executive is not subject to any non-competition, non-solicitation, confidentiality, or other restrictive covenant obligations that would impair Executive's ability to perform his duties with the Company, or that any such obligations have expired or been waived.

19. Miscellaneous Provisions

Non-Binding Nature. This Term Sheet is non-binding and does not create any legally enforceable rights or obligations on the part of either party. The terms set forth herein are subject to further negotiation, modification, and the execution of a definitive Executive Employment Agreement. Neither party shall have any liability to the other as a result of the preparation, delivery, or review of this Term Sheet or any negotiations or discussions relating hereto. This Term Sheet may not be relied upon as the basis for any claim or cause of action by either party.

Confidentiality of Term Sheet. This Term Sheet and its contents, including the specific terms and conditions set forth herein and the fact that the parties are engaged in discussions regarding Executive's potential employment, are strictly confidential. Neither party shall disclose this Term Sheet or its contents to any third party, except (a) to such party's respective legal, financial, and tax advisors who have a need to know and who have been informed of the confidential nature of these materials, (b) as otherwise required by applicable law, regulation, or legal process, or (c) as may be required by the Company's public disclosure obligations under the rules and regulations of the Securities and Exchange Commission or the Nasdaq Stock Market (including, if applicable, the filing of the definitive Employment Agreement as an exhibit to the Company's periodic reports). Executive specifically acknowledges that the premature disclosure of the terms of this Term Sheet or the pendency of negotiations could cause competitive harm to both the Company and Grandview Resorts International, Inc.

Entire Agreement. The definitive Executive Employment Agreement, when duly executed and delivered by both parties, will supersede this Term Sheet and all prior and contemporaneous negotiations, discussions, understandings, and agreements between the parties relating to the subject matter hereof, whether written or oral.

Authorized Negotiations. Calderwood & Harkness LLP (Renata Vasquez, Responsible Partner) is authorized to conduct negotiations on behalf of Redstone Gaming Corp. in connection with the terms of Executive's employment and the preparation of the definitive Employment Agreement. Executive's counsel is Harlan & Mosley LLP (Victoria R. Saldana, Partner). The parties agree that all substantive negotiations regarding the terms of the definitive Employment Agreement will be conducted through their respective counsel, unless otherwise mutually agreed.

20. Contact Information

For the Company:

Priya Narasimhan General Counsel Redstone Gaming Corp. 4100 Sandstone Ridge Boulevard Las Vegas, NV 89119

Dean R. Fulbright Chief Human Resources Officer Redstone Gaming Corp. 4100 Sandstone Ridge Boulevard Las Vegas, NV 89119

Outside Counsel: Renata Vasquez, Partner Calderwood & Harkness LLP 3900 Howard Hughes Parkway, Suite 800 Las Vegas, NV 89169

For the Executive:

Marcus J. Ellender 2288 Bristlecone Pines Drive Reno, NV 89511

Counsel: Victoria R. Saldana, Partner Harlan & Mosley LLP 200 West Liberty Street, Suite 1400 Reno, NV 89501

Acknowledgment

By signing below, each party acknowledges that it has received, reviewed, and discussed this Term Sheet with its respective legal counsel, and confirms its understanding that this Term Sheet is non-binding and is intended solely to facilitate the negotiation and preparation of a definitive Executive Employment Agreement. Neither party shall be bound by the terms hereof unless and until a definitive Executive Employment Agreement is duly executed and delivered by both parties.

Acknowledged and agreed as to the non-binding nature of this Term Sheet.

REDSTONE GAMING CORP.

By: ________

Name: Gavin T. Ashford

Title: Chief Executive Officer

Date: ________

EXECUTIVE

________________________________________

Marcus J. Ellender, Individually

Date: ________

November 17, 2023

Prepared by Calderwood & Harkness LLP on behalf of Redstone Gaming Corp.	Matter No. 1033-00005	CONFIDENTIAL
Vesting Date	Shares Vesting	Cumulative Shares Vested
February 15, 2025 (1st Anniversary)	11,666	11,666
February 15, 2026 (2nd Anniversary)	11,667	23,333
February 15, 2027 (3rd Anniversary)	11,667	35,000
Performance Level	Payout Percentage	Shares Issuable
Below Threshold	0%	0
Threshold	50%	10,000
Target	100%	20,000
Maximum	200%	40,000
Compensation Component	Annual Amount
Base Salary	$650,000
Annual Cash Bonus (at target, 85% of Base Salary)	$552,500
Annualized Equity — RSU Award (at target, $1,337,000 ÷ 3 years)	$445,667
Annualized Equity — PSU Award (at target, $764,000 ÷ 3 years)	$254,667
Total Annualized Equity (RSU + PSU, at target)	$700,333
Total Annual Compensation at Target	$1,902,833
Component	Amount
Total Annual Compensation at Target	$1,902,833
Signing Bonus (Year 1 only)	$300,000
Year-One Total	$2,202,833

EXECUTIVE EMPLOYMENT TERM SHEET
CONFIDENTIAL — FOR DISCUSSION PURPOSES ONLY
This Term Sheet is non-binding and is intended solely to outline the principal terms under which Redstone Gaming Corp. ("Company") proposes to employ Marcus J. Ellender ("Executive") as Executive Vice President & Chief Financial Officer. This Term Sheet does not constitute a binding obligation of either party, and neither party shall have any legal obligations to the other with respect to the matters set forth herein unless and until a definitive Executive Employment Agreement is prepared, negotiated, and duly executed by both parties reflecting mutually agreed-upon terms. Until such definitive agreement is executed, either party may withdraw from discussions at any time for any reason or no reason, without liability to the other.
Prepared by: Calderwood & Harkness LLP 3900 Howard Hughes Parkway, Suite 800 Las Vegas, NV 89169
On behalf of Redstone Gaming Corp.
Matter No.: 1033-00005 Date: November 17, 2023
Right-click to update Table of Contents
1. Parties
Employer: Redstone Gaming Corp., a Delaware corporation, with its principal executive offices located at 4100 Sandstone Ridge Boulevard, Las Vegas, Nevada 89119. The Company's common stock is listed on the Nasdaq Global Select Market under the ticker symbol "RDGM." The Company's Employer Identification Number is 88-3204617. Redstone Gaming Corp. is a diversified gaming, hospitality, and entertainment company operating casino resort properties, interactive digital gaming platforms, and related media entertainment businesses across multiple domestic and international jurisdictions.
Executive / Candidate: Marcus J. Ellender, an individual currently residing at 2288 Bristlecone Pines Drive, Reno, Nevada 89511. Mr. Ellender currently serves as Executive Vice President & Chief Accounting Officer of Grandview Resorts International, Inc., a privately held hospitality and gaming company headquartered in Reno, Nevada. Mr. Ellender has served in that capacity since 2018 and has more than twenty years of experience in financial leadership positions within the gaming and hospitality industry. Mr. Ellender holds an active Certified Public Accountant license in the State of Nevada.
2. Position and Title
Title. Executive will be appointed to the position of Executive Vice President & Chief Financial Officer of Redstone Gaming Corp., effective as of the Effective Date set forth in Section 3 below.
Reporting. Executive will report directly to the Chief Executive Officer of the Company, Gavin T. Ashford. No other officer or employee of the Company shall have supervisory authority over Executive except the Chief Executive Officer and the Board of Directors.
Duties. Executive will serve as the principal financial officer of Redstone Gaming Corp. within the meaning of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") promulgated thereunder. In such capacity, Executive will have overall responsibility for and oversight of all financial reporting and disclosure, treasury and cash management operations, tax planning and compliance, accounting and controllership, internal audit, investor relations and capital markets communications, corporate finance and capital allocation, budgeting and financial planning, and risk management functions of the Company and its subsidiaries. Executive will also perform such other duties, consistent with the position of Executive Vice President & Chief Financial Officer, as may be reasonably assigned from time to time by the Chief Executive Officer.
Board Interaction. Executive will attend meetings of the Board of Directors and its committees (including, without limitation, the Audit Committee, the Compensation Committee, and the Finance and Capital Allocation Committee) as requested by the Board or its Chair. Executive will serve as a "principal officer" of the Company for purposes of SEC reporting obligations, including but not limited to certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
Principal Location. Executive's principal place of employment will be the Company's corporate headquarters located in Las Vegas, Nevada. Executive acknowledges that the performance of his duties will require reasonable business travel, both domestic and international, consistent with the needs of the Company and the demands of Executive's position. The Company shall reimburse Executive for all reasonable and documented business travel expenses in accordance with the Company's travel and expense reimbursement policies applicable to senior executive officers.
3. Term of Employment
Effective Date / Proposed Start Date. The proposed effective date of Executive's employment (the "Effective Date") is February 15, 2024, or such other date as the parties may mutually agree upon. The Effective Date is subject to the satisfaction of all conditions precedent to employment set forth in Section 18 of this Term Sheet.
Initial Term. Executive's employment will be for an initial term of three (3) years commencing on the Effective Date and expiring on February 14, 2027 (the "Initial Term"), unless earlier terminated in accordance with the termination provisions set forth in Section 12 below.
Renewal. Following the expiration of the Initial Term, Executive's employment will automatically renew for successive one (1)-year terms (each, a "Renewal Term"), unless either party provides written notice of non-renewal to the other party at least ninety (90) days prior to the expiration of the then-current term (whether the Initial Term or any Renewal Term). Such notice of non-renewal may be given for any reason or no reason.
At-Will Caveat. Notwithstanding the foregoing provisions regarding the Initial Term and any Renewal Term, the employment relationship between the Company and Executive may be terminated at any time, with or without Cause and with or without Good Reason, in accordance with the termination provisions set forth in Section 12 below. The provisions regarding the Initial Term and Renewal Terms are intended to govern the notice requirements for non-renewal and the calculation of certain severance benefits and shall not be construed to guarantee employment for any specific duration.
4. Base Salary
Annual Base Salary. Executive will receive an annual base salary of Six Hundred Fifty Thousand Dollars ($650,000) per year (the "Base Salary"), payable in accordance with Redstone Gaming Corp.'s standard executive payroll practices, which currently provide for payment on a semi-monthly basis (i.e., on the 15th and last business day of each calendar month), less applicable withholdings and deductions required by law.
Annual Review. The Base Salary will be subject to annual review by the Compensation Committee of the Board of Directors (the "Compensation Committee"), with any increases to be determined in the sole discretion of the Compensation Committee. The Compensation Committee will consider, among other factors, the Company's financial performance, Executive's individual performance, competitive market data for similarly situated executives at peer group companies, and such other factors as the Compensation Committee deems relevant. Notwithstanding the foregoing, during the Initial Term, Executive's Base Salary shall not be decreased below Six Hundred Fifty Thousand Dollars ($650,000) without Executive's prior written consent. Any increase in Base Salary during the Initial Term or any Renewal Term shall establish a new minimum Base Salary floor for purposes of this provision.
5. Annual Cash Bonus
Target Bonus. Executive will be eligible to receive an annual cash performance bonus (the "Annual Bonus") with a target amount equal to eighty-five percent (85%) of Executive's then-current Base Salary (the "Target Bonus"). Based on the initial Base Salary of $650,000, the Target Bonus for the first year of employment would be Five Hundred Fifty-Two Thousand Five Hundred Dollars ($552,500).
Maximum Bonus. The maximum Annual Bonus payable to Executive in any fiscal year shall not exceed one hundred seventy percent (170%) of Executive's then-current Base Salary (the "Maximum Bonus"). Based on the initial Base Salary of $650,000, the Maximum Bonus for the first year of employment would be One Million One Hundred Five Thousand Dollars ($1,105,000). The actual Annual Bonus payable to Executive for any given fiscal year may range from zero to the Maximum Bonus, depending on the level of achievement of applicable performance metrics.
Performance Metrics. The Annual Bonus will be based on the achievement of corporate and individual performance objectives established annually by the Compensation Committee in consultation with the Chief Executive Officer. Performance objectives may include, without limitation, financial metrics (such as revenue growth, adjusted EBITDA, net income, free cash flow, and return on invested capital), operational metrics, strategic objectives, and individual performance goals. The Compensation Committee will establish threshold, target, and maximum performance levels for each metric, along with corresponding payout percentages, within the first ninety (90) days of each fiscal year (or, for the first year of employment, within a reasonable period following the Effective Date).
Payment Timing. The Annual Bonus, if earned, will be payable within seventy-five (75) days following the end of each fiscal year in which the bonus is earned. Payment of the Annual Bonus is subject to Executive's continued employment with the Company through the date on which the bonus is paid, except as otherwise expressly provided in the termination and severance provisions set forth in Section 12 below and the change-in-control provisions set forth in Section 13 below.
Year-One Considerations. For fiscal year 2024, Executive's Annual Bonus will be prorated based on the number of days elapsed from Executive's actual start date (expected to be February 15, 2024) through the end of the Company's fiscal year, divided by the total number of days in such fiscal year. The performance metrics applicable to Executive's prorated bonus for fiscal year 2024 will be established by the Compensation Committee as soon as practicable following the Effective Date.
6. Signing Bonus
Amount. In consideration of Executive's acceptance of employment with the Company and to compensate Executive, in part, for the forfeiture of certain compensation and benefits associated with his departure from Grandview Resorts International, Inc., the Company will pay Executive a one-time signing bonus of Three Hundred Thousand Dollars ($300,000) (the "Signing Bonus"). The Signing Bonus will be payable in a lump sum within thirty (30) days of the Effective Date.
Repayment Obligation / Clawback. If Executive voluntarily terminates his employment with the Company other than for Good Reason (as defined in Section 12.3 below), or if Executive's employment is terminated by the Company for Cause (as defined in Section 12.1 below), in either case within thirty-six (36) months of the Effective Date, Executive shall repay the Signing Bonus to the Company on a pro-rata basis. The repayment amount will be calculated as follows: $300,000 divided by 36 months, multiplied by the number of full months remaining in the 36-month period following the date of termination (i.e., $8,333.33 per remaining month). The Company may, at its election, offset any repayment obligation against any amounts otherwise payable to Executive following termination, to the extent permitted by applicable law.
Tax Treatment. The Signing Bonus will be subject to all applicable federal, state, and local tax withholding. No tax gross-up will be provided with respect to the Signing Bonus.
7. Equity Compensation
Executive will receive the following equity-based compensation awards in connection with the commencement of his employment with the Company:
7.1 Restricted Stock Units (RSUs)
Grant. On the Effective Date, the Company will grant to Executive 35,000 restricted stock units (the "RSU Award"), each representing the contingent right to receive one (1) share of Redstone Gaming Corp. common stock (Nasdaq: RDGM) upon vesting and settlement, subject to the terms and conditions of the applicable award agreement and the governing equity incentive plan.
Grant Date. The RSU Award will be granted on the Effective Date, which is expected to be February 15, 2024.
Vesting Schedule. The RSU Award will vest ratably over three (3) years in equal annual installments, subject to Executive's continued employment with the Company through each applicable vesting date. The vesting schedule is as follows:
Estimated Grant Date Fair Market Value. Based on the recent closing price of the Company's common stock of $38.20 per share as of the date of this Term Sheet, the estimated aggregate grant date fair market value of the RSU Award is approximately $1,337,000 (35,000 shares × $38.20/share). The actual grant date fair market value will be determined based on the closing price of the Company's common stock on the Effective Date.
Settlement. Vested RSUs will be settled by delivery of shares of the Company's common stock to Executive (or Executive's designated brokerage account) as soon as administratively practicable following each vesting date, but in no event later than thirty (30) days following the applicable vesting date. Settlement of vested RSUs is subject to applicable tax withholding, which may be satisfied by the Company's withholding of shares having a fair market value equal to the applicable withholding obligation, or by such other method as the Compensation Committee may determine.
Governing Plan. The RSU Award will be granted under the Redstone Gaming Corp. 2022 Omnibus Incentive Plan (or any successor plan thereto), and will be subject to the terms and conditions of such plan and the applicable award agreement to be entered into between the Company and Executive.
7.2 Performance Stock Units (PSUs)
Target Grant. On the Effective Date, the Company will grant to Executive 20,000 performance stock units at target (the "PSU Award"), each representing the contingent right to receive between zero (0) and two (2) shares of Redstone Gaming Corp. common stock upon vesting and settlement, based on the achievement of specified performance metrics over the applicable performance period.
Performance Period. The PSU Award will be subject to a three (3)-year cliff vesting period commencing on February 15, 2024 and ending on February 14, 2027 (the "Performance Period"). No portion of the PSU Award will vest prior to the expiration of the Performance Period, except as otherwise provided in the termination and change-in-control provisions set forth in Sections 12 and 13 below.
Payout Range. The number of shares of Company common stock issuable upon settlement of the PSU Award will range from 0% to 200% of the target number of performance stock units, as follows:
Payout percentages for performance between the threshold, target, and maximum levels will be determined by straight-line interpolation.
Performance Metrics. The specific performance metrics applicable to the PSU Award will be determined by the Compensation Committee. The parties anticipate that the performance metrics will include one or more of the following: (a) relative total shareholder return ("TSR") measured against a defined peer group of publicly traded gaming and hospitality companies, and/or (b) adjusted EBITDA growth over the Performance Period. The Compensation Committee will establish the specific metrics, weightings, threshold, target, and maximum performance levels, and the corresponding payout percentages within a reasonable period following the Effective Date.
Estimated Grant Date Fair Market Value. At target, the estimated aggregate grant date fair market value of the PSU Award is approximately $764,000 (20,000 shares × $38.20/share). The actual grant date fair market value will be determined in accordance with applicable accounting standards (ASC 718) based on the grant date valuation methodology approved by the Compensation Committee.
Settlement. The PSU Award will be settled by delivery of shares of the Company's common stock following certification of performance results by the Compensation Committee, which certification shall occur as soon as practicable following the end of the Performance Period, but in no event later than seventy-five (75) days following the end of the Performance Period. Settlement is subject to applicable tax withholding.
Governing Plan. The PSU Award will be granted under the Redstone Gaming Corp. 2022 Omnibus Incentive Plan (or any successor plan thereto), subject to the terms and conditions thereof and the applicable award agreement.
7.3 Future Equity Awards
Executive will be eligible to receive annual equity awards beginning in fiscal year 2025, at levels and in forms commensurate with similarly situated executive officers of the Company, as determined by the Compensation Committee in its sole discretion. The Compensation Committee will consider competitive market data, individual and corporate performance, and such other factors as it deems appropriate in determining the size, type, and terms of any future equity awards. The Company makes no commitment regarding the grant, amount, or terms of any future equity awards, and nothing in this Term Sheet shall be construed to create any entitlement to future equity awards beyond the RSU Award and PSU Award described in Sections 7.1 and 7.2 above.
8. Total Compensation Summary
The following table summarizes Executive's total annual compensation at target, based on the initial Base Salary and the estimated grant date fair market values of the equity awards described herein:
Year-One Total Compensation at Target:
The foregoing amounts are estimates based on the assumptions stated herein. Actual compensation will depend on, among other factors, the Company's stock price on the applicable grant dates, the achievement of applicable performance objectives, and determinations made by the Compensation Committee.
9. Employee Benefits
Health and Welfare Benefits. Executive and his eligible dependents will be entitled to participate in all health, dental, vision, life insurance, accidental death and dismemberment, short-term disability, long-term disability, and other welfare benefit plans and programs generally available to senior executive officers of the Company, on terms no less favorable than those provided to other similarly situated executives. The Company reserves the right to modify, amend, or terminate any benefit plan or program in its discretion, provided that any such modification, amendment, or termination is applied uniformly to all similarly situated senior executive officers.
Retirement Plans. Executive will be eligible to participate in the Company's 401(k) savings plan, including any employer matching contributions, on the same terms and conditions as other eligible employees. In addition, Executive will be eligible to participate in any nonqualified deferred compensation plan or supplemental executive retirement plan that is or may become available to senior executive officers of the Company, subject to the terms and conditions of such plan.
Paid Time Off. Executive will be entitled to paid time off consistent with the Company's policy for senior executive officers, which currently provides for a minimum of four (4) weeks of paid vacation annually, in addition to Company-observed holidays and personal days. Paid time off will accrue and may be carried over in accordance with the Company's applicable policies.
Executive Perquisites. Executive will be entitled to receive executive perquisites as may be provided from time to time to other C-suite executives of the Company. Current executive perquisites include, without limitation, an annual comprehensive executive health screening, a financial planning and tax preparation allowance, and such other benefits as the Company may establish. The Company reserves the right to modify the executive perquisites program from time to time, provided that any such modifications are applied uniformly to all similarly situated senior executive officers.
10. Relocation Allowance
Amount. The Company will provide Executive with a relocation allowance of up to One Hundred Fifty Thousand Dollars ($150,000) (the "Relocation Allowance") to cover reasonable, documented expenses associated with Executive's relocation from his current residence in Reno, Nevada to the Las Vegas, Nevada metropolitan area.
Covered Expenses. The Relocation Allowance may be applied toward the following categories of expenses, subject to the submission of reasonable documentation and receipts:
(a) Packing, moving, and transportation of household goods and personal effects;
(b) Temporary housing in the Las Vegas metropolitan area for a period of up to ninety (90) days;
(c) Customary closing costs, real estate commissions, title insurance, and related fees associated with the sale of Executive's current residence in Reno, Nevada;
(d) Customary closing costs, origination fees, title insurance, and related fees associated with the purchase of a new primary residence in the Las Vegas metropolitan area;
(e) Travel expenses for house-hunting trips (up to three round trips for Executive and his spouse or domestic partner); and
(f) Related incidental expenses, including utility connection and disconnection fees, storage fees (for up to sixty days), and other miscellaneous costs directly associated with the relocation.
Tax Treatment. Relocation benefits provided under this Section 10 will be subject to applicable federal, state, and local tax withholding. To the extent consistent with the Company's prevailing policy for executive relocations, the Company will provide a tax gross-up payment to Executive to offset the additional income tax liability arising from the taxable portion of the Relocation Allowance, such that Executive is made whole on an after-tax basis for the relocation expenses reimbursed by the Company.
Timing. Executive's relocation to the Las Vegas metropolitan area is to be substantially completed within six (6) months of the Effective Date. The Company and Executive will cooperate in good faith to facilitate a smooth and timely relocation. Requests for reimbursement of relocation expenses must be submitted within twelve (12) months of the Effective Date.
11. Directors' and Officers' Insurance; Indemnification
D&O Insurance. Executive will be covered under the Company's existing directors' and officers' liability insurance policy maintained with Pinnacle Investors Indemnity Group, on the same terms and conditions as other senior executive officers and directors of the Company. The Company will maintain directors' and officers' liability insurance coverage that is reasonable and customary for companies of comparable size and operations in the gaming and hospitality industry.
Tail Coverage. The Company will maintain directors' and officers' liability insurance coverage for Executive for a period of at least six (6) years following the termination of Executive's employment with the Company, with respect to claims arising from acts or omissions occurring during the period of Executive's employment. Such tail coverage may be provided through a run-off policy, an extension of the Company's existing policy, or such other arrangement as the Company determines to be appropriate, provided that the coverage levels are no less favorable than those in effect during Executive's employment.
Indemnification. Executive will be entitled to indemnification and advancement of expenses to the fullest extent permitted by the Company's certificate of incorporation and bylaws (as may be amended from time to time) and applicable Delaware law. The Company and Executive will enter into a separate indemnification agreement on terms substantially consistent with the form of indemnification agreement entered into with other senior executive officers and directors of the Company, providing for indemnification to the maximum extent permitted by Delaware law.
12. Termination Provisions
The definitive Executive Employment Agreement will include detailed provisions governing the termination of Executive's employment, including the definitions, procedures, and consequences set forth below. In the event of any termination of employment, the definitive agreement will set forth the specific mechanics for providing notice, the effective date of termination, and the timing and manner of payments.
12.1 Termination by the Company for Cause
Definition of "Cause." For purposes of this Term Sheet, "Cause" means the occurrence of any of the following, as determined by the Board of Directors (or a committee thereof) in good faith:
(i) Executive's conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, dishonesty, or fraud;
(ii) Executive's willful and continued failure to substantially perform his material duties under the Employment Agreement (other than as a result of physical or mental incapacity), after the Company has delivered written notice to Executive specifying the nature of such failure and Executive has failed to cure such failure within thirty (30) calendar days following receipt of such notice;
(iii) Executive's willful misconduct or gross negligence in the performance of his duties that results, or is reasonably likely to result, in material harm to the Company or its reputation;
(iv) Executive's material breach of his fiduciary duties to the Company;
(v) Executive's material violation of the Company's written policies, including without limitation the Company's Code of Business Conduct and Ethics, insider trading policy, anti-harassment policy, or other material compliance policies; or
(vi) Executive's commission of fraud, embezzlement, or misappropriation of Company funds, assets, or property.
Entitlements on Cause Termination. In the event of a termination of Executive's employment by the Company for Cause, Executive will be entitled to receive only the following (collectively, "Accrued Obligations"): (a) accrued but unpaid Base Salary through the date of termination; (b) reimbursement for any unreimbursed business expenses incurred prior to the date of termination in accordance with the Company's expense reimbursement policy; (c) accrued but unused paid time off through the date of termination, to the extent payable under Company policy; and (d) any vested benefits under the Company's benefit plans in accordance with the terms of such plans. Executive will not be entitled to any severance payment, any Annual Bonus for the fiscal year in which the termination occurs (whether prorated or otherwise), or any acceleration or continued vesting of unvested equity awards. All unvested equity awards will be forfeited as of the date of termination.
12.2 Termination by the Company Without Cause
In the event that the Company terminates Executive's employment without Cause (and other than due to Executive's death or Disability), Executive will be entitled to the following, in addition to the Accrued Obligations:
Severance Payment. A cash severance payment equal to one and one-half times (1.5×) Executive's then-current annual Base Salary. Based on the initial Base Salary of $650,000, the severance payment would be Nine Hundred Seventy-Five Thousand Dollars ($975,000). The severance payment will be payable, at the Company's election, either in a single lump sum within sixty (60) days following the date of termination, or in substantially equal installments over a period of eighteen (18) months following the date of termination, in accordance with the Company's standard payroll practices, less applicable withholdings.
Pro-Rata Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual performance results for the full fiscal year as determined by the Compensation Committee, prorated based on the number of days Executive was employed during such fiscal year. The pro-rata bonus, if earned, will be payable at the same time Annual Bonuses are ordinarily paid to other senior executives of the Company for such fiscal year.
COBRA Continuation. Company-paid COBRA health insurance continuation coverage for Executive and his eligible dependents for a period of eighteen (18) months following the date of termination, or until Executive becomes eligible for comparable health insurance coverage through a subsequent employer, whichever occurs first. If the provision of COBRA subsidies would result in adverse tax consequences to the Company or violate applicable nondiscrimination rules, the Company may instead provide Executive with a taxable monthly cash payment equal to the applicable COBRA premium for the remainder of the 18-month period.
Equity Treatment. Unvested RSUs will vest on a pro-rata basis, calculated based on the number of full months of Executive's employment from the applicable grant date through the date of termination, divided by the total number of months in the original vesting schedule. Unvested PSUs will vest on a pro-rata basis through the date of termination, with the number of shares ultimately issuable determined based on actual performance results at the end of the applicable Performance Period, as certified by the Compensation Committee. Settlement of pro-rata vested PSUs will occur at the same time as PSUs would otherwise have been settled had Executive remained employed through the end of the Performance Period.
Release Requirement. All severance benefits described in this Section 12.2 (other than the Accrued Obligations) are expressly conditioned upon Executive's timely execution and non-revocation of a general release of claims in a form reasonably acceptable to the Company (the "Release"). Executive must execute the Release within the time period specified therein (which shall be no longer than forty-five (45) days following the date of termination), and the Release must become effective and irrevocable in accordance with its terms. If Executive fails to execute the Release within the specified period or revokes the Release within any applicable revocation period, Executive will forfeit all severance benefits and will be entitled only to the Accrued Obligations.
12.3 Resignation by Executive for Good Reason
Definition of "Good Reason." For purposes of this Term Sheet, "Good Reason" means the occurrence of any of the following without Executive's prior written consent:
(i) A material reduction in Executive's Base Salary (other than a reduction of less than ten percent (10%) that is applied uniformly to all senior executive officers of the Company);
(ii) A material diminution in Executive's title, authority, duties, or responsibilities, including a requirement that Executive report to any person other than the Chief Executive Officer or the Board of Directors;
(iii) A relocation of Executive's principal workplace to a location more than fifty (50) miles from the Company's current headquarters in Las Vegas, Nevada; or
(iv) A material breach by the Company of any material provision of the Employment Agreement;
provided, however, that no event shall constitute Good Reason unless: (a) Executive provides written notice to the Company specifying in reasonable detail the condition or event giving rise to Good Reason within sixty (60) days of the initial occurrence thereof; (b) the Company fails to cure such condition or event within thirty (30) calendar days following receipt of such written notice; and (c) Executive actually resigns from employment within thirty (30) calendar days following the expiration of the Company's cure period.
Entitlements. In the event Executive resigns from employment for Good Reason in compliance with the notice and cure procedures described above, Executive will be entitled to the same severance benefits as would be payable upon a termination by the Company without Cause, as set forth in Section 12.2 above, subject to Executive's execution and non-revocation of the Release.
12.4 Resignation by Executive Without Good Reason
In the event Executive voluntarily resigns from employment without Good Reason, Executive will be entitled to receive only the Accrued Obligations. Executive will not be entitled to any severance payment, any Annual Bonus for the fiscal year in which the resignation occurs, or any acceleration or continued vesting of unvested equity awards. All unvested equity awards will be forfeited as of the date of resignation. In addition, the Signing Bonus clawback provisions set forth in Section 6 above shall apply.
12.5 Death or Disability
In the event of Executive's death or Disability, Executive (or Executive's estate or beneficiaries, as applicable) will be entitled to receive the following, in addition to the Accrued Obligations:
Pro-Rata Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual performance results for the full fiscal year (or, at the Compensation Committee's discretion, based on target performance), prorated based on the number of days Executive was employed during such fiscal year.
Equity Acceleration. Full accelerated vesting of all unvested RSUs. All unvested PSUs will vest at the target level (i.e., 100% of the target number of performance stock units).
Definition of "Disability." For purposes of this Term Sheet, "Disability" means Executive's inability, due to physical or mental impairment, to perform the essential functions of his position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days, or for an aggregate of two hundred seventy (270) calendar days within any three hundred sixty-five (365)-day period, as certified by a physician mutually agreed upon by the Company and Executive (or Executive's legal representative).
13. Change-in-Control Provisions
Double-Trigger Structure. Executive will not be entitled to any enhanced severance or accelerated equity vesting solely by reason of a Change in Control. Enhanced severance and equity acceleration will be payable only upon a "qualifying termination," defined as a termination of Executive's employment by the Company without Cause, or a resignation by Executive for Good Reason, occurring within twenty-four (24) months following the effective date of a Change in Control (a "CIC Qualifying Termination").
CIC Severance Amount. In the event of a CIC Qualifying Termination, Executive will be entitled to a lump-sum cash severance payment equal to two times (2×) the sum of (a) Executive's then-current annual Base Salary, plus (b) Executive's Target Bonus for the fiscal year in which the termination occurs. Based on the initial Base Salary and Target Bonus, the CIC severance payment would be calculated as follows: ($650,000 + $552,500) × 2 = $2,405,000. Executive will also be entitled to a pro-rata Annual Bonus for the year of termination (based on target performance, prorated through the date of termination) and Company-paid COBRA continuation coverage for twenty-four (24) months following termination.
Equity Acceleration. Upon the occurrence of a Change in Control, all unvested PSUs will be deemed earned at the target level (100% of the target number of performance stock units), and such PSUs will be converted into time-based RSUs that will vest on the same schedule as Executive's other unvested RSUs. In the event of a CIC Qualifying Termination, all unvested RSUs (including any PSUs converted into time-based RSUs upon the Change in Control) will vest in full immediately upon the date of termination.
Definition of "Change in Control." The term "Change in Control" will be defined in the definitive Executive Employment Agreement and is expected to include the following events:
(i) The acquisition by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) of more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the Company;
(ii) A change in the composition of the Board of Directors such that the individuals who constitute the Board as of the Effective Date (the "Incumbent Board"), together with any new directors whose election or nomination was approved by a vote of at least a majority of the Incumbent Board, cease to constitute a majority of the Board;
(iii) The consummation of a merger, consolidation, reorganization, or similar transaction involving the Company, or the sale or other disposition of all or substantially all of the assets of the Company, unless, immediately following such transaction, the stockholders of the Company immediately prior to such transaction continue to hold at least fifty percent (50%) of the combined voting power of the surviving or acquiring entity; or
(iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
The definition of Change in Control will be drafted to comply with Section 409A of the Internal Revenue Code, to the extent applicable.
Section 280G. No excise tax gross-up will be provided under the Employment Agreement. Instead, the definitive agreement will include a "best net" cutback provision, under which the aggregate payments and benefits payable to Executive that constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code will be reduced to the extent necessary to avoid the imposition of excise taxes under Section 4999 of the Code, but only if such reduction would result in a greater after-tax benefit to Executive than would be realized if the full amount of such payments and benefits were paid and Executive bore the excise tax liability. Any such reduction will be applied in the order that results in the greatest economic benefit to Executive, consistent with Section 409A.
14. Restrictive Covenant Provisions
The definitive Executive Employment Agreement will contain restrictive covenant obligations as material terms of Executive's employment with the Company. Executive acknowledges and agrees that the consideration for such restrictive covenant obligations is embedded within the compensation and severance arrangements described in this Term Sheet, and that compliance with the restrictive covenant provisions set forth below is a condition to Executive's receipt of severance benefits. The following sets forth the anticipated scope and duration of the restrictive covenants:
14.1 Non-Competition.  Duration. Eighteen (18) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination (whether by the Company, by Executive, or by reason of the expiration of the term of employment).
Scope. During the restricted period, Executive shall not, directly or indirectly, whether as an employee, officer, director, consultant, advisor, independent contractor, partner, member, owner, investor, or in any other capacity, engage in, be employed by, consult for, manage, operate, control, or own any interest (other than passive investments of less than two percent (2%) of the outstanding publicly traded securities of any entity) in any business or enterprise that competes with the Company's casino gaming, resort operations, interactive digital gaming, or media entertainment businesses.
Geographic Scope. The non-competition restriction will apply throughout the United States and any other jurisdiction in which the Company or any of its subsidiaries or affiliates operates, or in which the Company has filed gaming license applications, as of the date of Executive's termination of employment.
14.2 Non-Solicitation of Employees
Duration. Twenty-four (24) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination.
Scope. During the restricted period, Executive shall not, directly or indirectly, recruit, solicit, hire, or engage, or attempt to recruit, solicit, hire, or engage, or induce or encourage to leave the employ of the Company, any individual who is an employee of the Company or any of its subsidiaries or affiliates, or who was an employee of the Company or any of its subsidiaries or affiliates at any time during the six (6) months immediately preceding such recruitment, solicitation, hiring, engagement, or inducement. This restriction applies regardless of whether the employee would be in violation of any contractual obligation by leaving the Company's employment.
14.3 Non-Solicitation of Customers and Business Partners
Duration. Eighteen (18) months following the date of termination of Executive's employment with the Company, regardless of the reason for such termination.
Scope. During the restricted period, Executive shall not, directly or indirectly, solicit, divert, take away, or accept business from, or attempt to solicit, divert, take away, or accept business from, any customer, patron, vendor, supplier, licensee, joint venture partner, or other business partner of the Company or any of its subsidiaries or affiliates with whom Executive had material contact, or about whom Executive received Confidential Information, during the last twenty-four (24) months of Executive's employment with the Company.
14.4 Confidentiality.  Duration. Perpetual. Executive's obligations with respect to Confidential Information shall survive the termination of Executive's employment for any reason and shall continue indefinitely.
Scope. Executive shall not, at any time during or after his employment, disclose, use, publish, or otherwise communicate any Confidential Information (as will be defined in the definitive Employment Agreement) of the Company, its subsidiaries, its affiliates, or its business partners, except (a) as required in the faithful performance of Executive's duties on behalf of the Company, (b) as required by applicable law, regulation, or legal process (including a subpoena or court order), provided that Executive provides the Company with prompt written notice of such requirement to the extent permitted by law, or (c) with the prior written consent of the Company. "Confidential Information" is expected to be broadly defined in the definitive agreement to include, without limitation, trade secrets, proprietary data, financial information and projections, business plans, customer and patron data, marketing strategies, gaming analytics, technology and software, intellectual property, regulatory filings and correspondence, and any other information that derives independent economic value from not being generally known to the public or to the Company's competitors.
Whistleblower Carve-Out. Notwithstanding the foregoing, nothing in the confidentiality provisions of the Employment Agreement will prohibit or restrict Executive from (i) reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Equal Employment Opportunity Commission, or any applicable state or local agency, or (ii) making disclosures that are protected under the whistleblower provisions of applicable federal, state, or local law or regulation. Executive is not required to notify the Company prior to making any such report or disclosure. In addition, pursuant to the Defend Trade Secrets Act of 2016, Executive is hereby notified that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a government official or an attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a complaint or other document filed under seal in a lawsuit or other proceeding.
14.5 Restrictive Covenant Remedies
Executive acknowledges that the Company's business is highly competitive and that the restrictions set forth in Sections 14.1 through 14.4 are reasonable and necessary to protect the Company's legitimate business interests, including its Confidential Information, customer and business relationships, and investment in Executive's training and development. Executive further acknowledges that any breach or threatened breach of the restrictive covenant provisions would cause the Company irreparable harm that cannot be adequately compensated by money damages alone, and that the Company would be difficult to calculate the full extent of such damages.
Accordingly, in the event of a breach or threatened breach of any of the restrictive covenant provisions, the Company shall be entitled to seek temporary, preliminary, and permanent injunctive relief, specific performance, and other equitable remedies from any court of competent jurisdiction, without the necessity of posting bond or proving actual damages, in addition to any other remedies available at law or in equity. The seeking of injunctive or equitable relief shall not be construed as a waiver of any other rights or remedies that the Company may have, including the right to recover monetary damages.
Tolling. If Executive breaches any of the restrictive covenant provisions set forth in Sections 14.1, 14.2, or 14.3, the restricted period applicable to such provision shall be extended by a period of time equal to the duration of Executive's violation, such that the Company receives the full benefit of the bargained-for restricted period.
15. Clawback Policy
Executive's incentive-based compensation (including, without limitation, the Annual Bonus, the Signing Bonus, the RSU Award, the PSU Award, and any future equity awards) will be subject to any clawback, recoupment, or forfeiture policy adopted by the Company from time to time, including any policy required under applicable law, the rules and regulations of the Securities and Exchange Commission (including SEC Rule 10D-1), and the listing standards of the Nasdaq Stock Market. The Company has adopted a clawback policy in compliance with Nasdaq Listing Rule 5608, effective as of October 2, 2023, and Executive will be required to acknowledge and agree to be bound by the terms of such policy as a condition of employment.
16. Section 409A Compliance
All payments and benefits under the definitive Executive Employment Agreement will be designed to comply with, or to be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), and the Treasury Regulations and other guidance promulgated thereunder. The definitive agreement will be interpreted and administered in a manner consistent with Section 409A. To the extent that any payment or benefit under the agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A and Executive is a "specified employee" (as defined in Section 409A(a)(2)(B)(i) of the Code) at the time of Executive's "separation from service" (as defined in Section 409A), such payment or benefit will be delayed until the first business day following the six (6)-month anniversary of Executive's separation from service (or, if earlier, Executive's death), and any payments that would otherwise have been made during such six-month period will be accumulated and paid in a lump sum on such date. Each installment payment under the agreement will be treated as a separate payment for purposes of Section 409A.
17. Governing Law and Dispute Resolution
Governing Law. The definitive Executive Employment Agreement will be governed by and construed in accordance with the laws of the State of Nevada, without regard to its conflicts of law principles that would result in the application of the laws of any other jurisdiction.
Dispute Resolution. Except as otherwise provided below, any dispute, claim, or controversy arising out of, relating to, or in connection with the Executive Employment Agreement or Executive's employment with the Company (including the termination thereof) will be resolved through final and binding arbitration, administered by JAMS (or a successor alternative dispute resolution provider) in Las Vegas, Nevada, in accordance with JAMS' then-current Employment Arbitration Rules and Procedures. The arbitration will be conducted before a single arbitrator mutually agreed upon by the parties (or, failing agreement, appointed by JAMS in accordance with its rules). The arbitrator's award will be final and binding on the parties and may be entered as a judgment in any court of competent jurisdiction. Each party will bear its own attorneys' fees and costs, except that the arbitrator may award reasonable attorneys' fees to the prevailing party.
Notwithstanding the foregoing, nothing in the arbitration provision shall preclude the Company from seeking temporary, preliminary, or permanent injunctive relief, or other equitable remedies, in a court of competent jurisdiction to enforce the restrictive covenant provisions set forth in Section 14 of the Employment Agreement or to protect the Company's Confidential Information, trade secrets, or other proprietary rights. The parties consent to the exclusive jurisdiction of the state and federal courts located in Clark County, Nevada for purposes of any such proceedings.
18. Conditions Precedent to Employment
Executive's employment with the Company is contingent upon the satisfaction of each of the following conditions precedent, which must be completed to the Company's reasonable satisfaction prior to or concurrently with the Effective Date:
(a) Definitive Agreement. Negotiation and execution of a definitive Executive Employment Agreement, in form and substance mutually acceptable to the Company and Executive, reflecting the terms set forth in this Term Sheet and such other terms as the parties may agree upon.
(b) Background Check. Satisfactory completion of a comprehensive background check and reference verification, conducted in accordance with the Company's standard pre-employment screening policies for senior executive officers.
(c) Employment Eligibility. Confirmation of Executive's eligibility to work in the United States, as required by the Immigration Reform and Control Act of 1986 and applicable regulations.
(d) Professional Licensure. Verification that Executive holds an active Certified Public Accountant (CPA) license in the State of Nevada (License No. CPA-NV-041882), in good standing and without pending disciplinary proceedings.
(e) Gaming Regulatory Compliance. Compliance with any applicable gaming regulatory requirements, including without limitation the submission of all required applications for gaming employee licenses, key employee licenses, or other approvals as may be required by the Nevada Gaming Control Board, the Nevada Gaming Commission, and the gaming regulatory authorities of any other jurisdiction in which the Company or its subsidiaries hold gaming licenses or operate gaming facilities. Executive acknowledges that the Company's ability to employ him is contingent upon his suitability and licensability under applicable gaming regulations, and Executive agrees to cooperate fully with any regulatory investigations or proceedings.
(f) Resignation from Current Employment. Resignation from Executive's current employment at Grandview Resorts International, Inc. and confirmation, satisfactory to the Company and its counsel, that Executive is not subject to any non-competition, non-solicitation, confidentiality, or other restrictive covenant obligations that would impair Executive's ability to perform his duties with the Company, or that any such obligations have expired or been waived.
19. Miscellaneous Provisions
Non-Binding Nature. This Term Sheet is non-binding and does not create any legally enforceable rights or obligations on the part of either party. The terms set forth herein are subject to further negotiation, modification, and the execution of a definitive Executive Employment Agreement. Neither party shall have any liability to the other as a result of the preparation, delivery, or review of this Term Sheet or any negotiations or discussions relating hereto. This Term Sheet may not be relied upon as the basis for any claim or cause of action by either party.
Confidentiality of Term Sheet. This Term Sheet and its contents, including the specific terms and conditions set forth herein and the fact that the parties are engaged in discussions regarding Executive's potential employment, are strictly confidential. Neither party shall disclose this Term Sheet or its contents to any third party, except (a) to such party's respective legal, financial, and tax advisors who have a need to know and who have been informed of the confidential nature of these materials, (b) as otherwise required by applicable law, regulation, or legal process, or (c) as may be required by the Company's public disclosure obligations under the rules and regulations of the Securities and Exchange Commission or the Nasdaq Stock Market (including, if applicable, the filing of the definitive Employment Agreement as an exhibit to the Company's periodic reports). Executive specifically acknowledges that the premature disclosure of the terms of this Term Sheet or the pendency of negotiations could cause competitive harm to both the Company and Grandview Resorts International, Inc.
Entire Agreement. The definitive Executive Employment Agreement, when duly executed and delivered by both parties, will supersede this Term Sheet and all prior and contemporaneous negotiations, discussions, understandings, and agreements between the parties relating to the subject matter hereof, whether written or oral.
Authorized Negotiations. Calderwood & Harkness LLP (Renata Vasquez, Responsible Partner) is authorized to conduct negotiations on behalf of Redstone Gaming Corp. in connection with the terms of Executive's employment and the preparation of the definitive Employment Agreement. Executive's counsel is Harlan & Mosley LLP (Victoria R. Saldana, Partner). The parties agree that all substantive negotiations regarding the terms of the definitive Employment Agreement will be conducted through their respective counsel, unless otherwise mutually agreed.
20. Contact Information
For the Company:
Priya Narasimhan General Counsel Redstone Gaming Corp. 4100 Sandstone Ridge Boulevard Las Vegas, NV 89119
Dean R. Fulbright Chief Human Resources Officer Redstone Gaming Corp. 4100 Sandstone Ridge Boulevard Las Vegas, NV 89119
Outside Counsel: Renata Vasquez, Partner Calderwood & Harkness LLP 3900 Howard Hughes Parkway, Suite 800 Las Vegas, NV 89169
For the Executive:
Marcus J. Ellender 2288 Bristlecone Pines Drive Reno, NV 89511
Counsel: Victoria R. Saldana, Partner Harlan & Mosley LLP 200 West Liberty Street, Suite 1400 Reno, NV 89501
Acknowledgment
By signing below, each party acknowledges that it has received, reviewed, and discussed this Term Sheet with its respective legal counsel, and confirms its understanding that this Term Sheet is non-binding and is intended solely to facilitate the negotiation and preparation of a definitive Executive Employment Agreement. Neither party shall be bound by the terms hereof unless and until a definitive Executive Employment Agreement is duly executed and delivered by both parties.
Acknowledged and agreed as to the non-binding nature of this Term Sheet.
REDSTONE GAMING CORP.
By: ________
Name: Gavin T. Ashford
Title: Chief Executive Officer
Date: ________
EXECUTIVE
________________________________________
Marcus J. Ellender, Individually
Date: ________
November 17, 2023
Prepared by Calderwood & Harkness LLP on behalf of Redstone Gaming Corp. | Matter No. 1033-00005 | CONFIDENTIAL
Vesting Date | Shares Vesting | Cumulative Shares Vested
February 15, 2025 (1st Anniversary) | 11,666 | 11,666
February 15, 2026 (2nd Anniversary) | 11,667 | 23,333
February 15, 2027 (3rd Anniversary) | 11,667 | 35,000
Performance Level | Payout Percentage | Shares Issuable
Below Threshold | 0% | 0
Threshold | 50% | 10,000
Target | 100% | 20,000
Maximum | 200% | 40,000
Compensation Component | Annual Amount
Base Salary | $650,000
Annual Cash Bonus (at target, 85% of Base Salary) | $552,500
Annualized Equity — RSU Award (at target, $1,337,000 ÷ 3 years) | $445,667
Annualized Equity — PSU Award (at target, $764,000 ÷ 3 years) | $254,667
Total Annualized Equity (RSU + PSU, at target) | $700,333
Total Annual Compensation at Target | $1,902,833
Component | Amount
Total Annual Compensation at Target | $1,902,833
Signing Bonus (Year 1 only) | $300,000
Year-One Total | $2,202,833

EXECUTIVE EMPLOYMENT TERM SHEET

REDSTONE GAMING CORP.

EXECUTIVE

Record

Parties

Dates

Amounts