Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze whether the formal notice of intent to nominate directors delivered by Hargrove Sloane & Birch LLP, acting as counsel to Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"), on December 8, 2022 (the "Nomination Notice"), complies with the advance-notice provisions set forth in Article II, Section 2.11, of the Amended and Restated Bylaws of Redston

II. Background A. The Activist Campaign Pinnacle Harbor Capital Partners, LP is a Delaware limited partnership whose general partner is Pinnacle Harbor Capital Management, LLC, a Delaware limited liability company. The fund is managed by Viktor S. Kessler, who serves as Managing Partner and Chief Investment Officer, and Nadia Johar, who serves as Head of Activism and Portfolio Manager. Pinnacle Harbor is a long-short

III. Advance-Notice Window Calculation A. Governing Bylaw Provision The advance-notice requirements for stockholder nominations of director candidates are set forth in Article II, Section 2.11 of the Amended and Restated Bylaws of Redstone Gaming Corp., which were last amended on September 12, 2021. Relevant excerpts from Section 2.11 are attached hereto as Appendix A.

Section 2.11 provides, in relevant part, that a stockholder seeking to nominate one or more persons for election as directors at an annual meeting of stockholders must deliver timely written notice of such nomination to the Corporate Secretary of the Company at the Company's principal executive offices. The notice must set forth the information specified in Section 2.11, as described in detail in Section IV below. Fo

IV. Informational and Procedural Requirements of Section 2.11 A. Overview of Required Disclosures

Article II, Section 2.11 of the Bylaws sets forth detailed informational and procedural requirements that a nominating stockholder's notice must satisfy. These requirements serve the important corporate purposes of (i) providing the Board and the Company's stockholders with sufficient information to evaluate proposed nominees, (ii) permitting the Company to conduct appropriate background and regulatory due diligence

1. Identity and Ownership Disclosure. Requirement. Section 2.11 requires the nominating stockholder's notice to set forth the name, address, and number of shares of the Company's capital stock beneficially owned by the nominating stockholder, by any beneficial owner on whose behalf the nomination is being made, and by any "associated person" of the foregoing (including, without limitation, any person controlling, con

2. Derivative and Hedging Positions. Requirement. Section 2.11 requires disclosure of any derivative positions (including options, warrants, convertible securities, stock appreciation rights, or similar instruments), hedging arrangements (including swaps, collars, or forward contracts), short interests, or other economic exposures with respect to the Company's securities held by the nominating stockholder, any benefi

3. Voting Agreements and Arrangements. Requirement. Section 2.11 requires disclosure of any agreements, arrangements, or understandings between the nominating stockholder (or any beneficial owner on whose behalf the nomination is being made) and any other person or persons relating to the nomination, the acquisition, holding, or voting of shares of the Company's capital stock, or any proxy, vote, consent, or other ar

4. Representation Regarding Intent to Solicit Proxies. Requirement. Section 2.11 requires the nominating stockholder's notice to include a representation as to whether the nominating stockholder (or any beneficial owner on whose behalf the nomination is being made) intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company's outstanding capital stock required to ele

1. Biographical and Background Information. Requirement. Section 2.11 requires the nominating stockholder's notice to set forth, with respect to each person proposed to be nominated for election as a director: (a) the name, age, business address, and residence address of the nominee; (b) the principal occupation or employment of the nominee; (c) a description of all directorships and other positions of responsibility

2. Beneficial Ownership of Nominee. Requirement. Section 2.11 requires disclosure of the number of shares of the Company's capital stock beneficially owned by each nominee. December 8 Notice Content. The Nomination Notice states that neither Dr. Trevelyan nor Mr. Grayson currently holds any shares of RGC common stock or any other class of the Company's capital stock. Assessment: Compliant. The statement of zero owner

3. Questionnaire and Representation Agreement. Requirement. Section 2.11 requires each nominee to complete and sign the Company's standard director questionnaire (in the form provided by the Corporate Secretary upon request) and to execute a written representation and agreement, in the form provided by the Corporate Secretary, addressing the following matters: (a) A representation that the nominee is not and will not

4. Gaming Regulatory Licensing. Requirement. The Bylaws do not contain an explicit requirement that director nominees demonstrate gaming regulatory suitability or licensability as a condition to nomination. However, Redstone Gaming Corp. is a publicly traded gaming company that holds gaming licenses issued by the Nevada Gaming Control Board (the "NGCB") and gaming regulatory authorities in multiple other jurisdiction

1. Consent to Be Named and to Serve. Requirement. Section 2.11 requires that the nominating stockholder's notice include a written consent of each nominee to be named in a proxy statement as a nominee for election to the Board and to serve as a director of the Company if elected. December 8 Notice Content. The Nomination Notice includes a general statement — within the body of counsel's cover letter — that "both Dr.

2. Compliance with Rule 14a-19 (Universal Proxy). Requirement. SEC Rule 14a-19 (the "universal proxy" rule), which became effective for annual meetings held after August 31, 2022, requires a stockholder who intends to solicit proxies in support of director nominees other than the registrant's nominees to provide written notice to the registrant stating the stockholder's intent to solicit proxies in support of such no

V. Summary of Identified Deficiencies The following table summarizes the deficiencies identified in the December 8, 2022 Nomination Notice based on the analysis set forth in Sections III and IV above: Deficiency Nos. 1 through 6 represent failures to comply with specific requirements of Article II, Section 2.11 of the Bylaws and should be identified as such in the Company's response letter. Deficiency Nos. 7 and 8 ar

VI. Recommended Course of Action A. Response to Hargrove Sloane & Birch LLP We recommend that the Company promptly draft and send a response letter from Patricia Nakamura, in her capacity as Corporate Secretary, addressed to Jonathan Birch III at Hargrove Sloane & Birch LLP, acknowledging receipt of the December 8, 2022 Nomination Notice and addressing the following matters:

1. Timeliness. The response letter should identify the timeliness deficiency — specifically, that the Nomination Notice was delivered on December 8, 2022, four calendar days before the advance-notice window opened on December 12, 2022, and that under the plain language of Article II, Section 2.11, a notice delivered before the "not earlier than" date is premature and therefore not timely.

2. Informational deficiencies. The response letter should identify each of the specific informational and procedural deficiencies catalogued in Section V above (Deficiency Nos. 2 through 8), with references to the applicable provisions of Section 2.11 and, where appropriate, SEC Rule 14a-19.

3. Request for cure. The response letter should request that Pinnacle Harbor deliver a compliant, cured, supplemental or amended nomination notice within the advance-notice window — that is, no later than the close of business on January 11, 2023. To facilitate completion of the director questionnaires and representation and agreement letters, the response letter should enclose (or offer to transmit) the Company's st

4. Reservation of rights. The response letter should contain a clear and unambiguous statement that the Company reserves all rights under Article II, Section 2.11 of the Bylaws with respect to any failure by Pinnacle Harbor to comply with the advance-notice requirements, including the right to reject any nomination notice that does not satisfy the requirements of Section 2.11, and that nothing in the response letter

1. Financial advisor coordination. Continue working closely with the Company's financial advisor, Calloway Pinnacle Trust Bank (engagement led by Thomas V. Ashford, Managing Director), to prepare the Board's response to Pinnacle Harbor's demands regarding strategic alternatives for the interactive gaming division, capital return, and related matters. The financial advisor should be prepared to support the Board's art

2. Proxy solicitor coordination. Continue coordination with the Company's proxy solicitor, Whitfield Morrow Partners, LLC (engagement led by Denise Cavanaugh, Managing Director), to prepare for a contested proxy solicitation. This includes stockholder engagement strategy, voting analysis, and preparation of preliminary proxy materials.

3. Investor relations advisor coordination. Continue coordination with the Company's investor relations advisor, Harlan Ridge Communications, LLC (engagement led by Philip Navarette, Managing Director), to manage stockholder and media communications throughout the proxy contest.

4. Schedule 13D monitoring. Monitor for any amended Schedule 13D filings by Pinnacle Harbor reflecting changes in ownership levels, stated intentions, or the formation of a group with other stockholders. Any material changes should be promptly flagged for the Board and the Special Committee.

5. Nominee due diligence. Initiate appropriate background due diligence on Dr. Trevelyan and Mr. Grayson, subject to applicable legal constraints, including review of public records, regulatory databases, and available information regarding their professional qualifications, regulatory history, and potential conflicts of interest. This information will be critical to the Board's evaluation of the nominees' suitabilit

1. Response letter. The Company's response letter to Hargrove Sloane & Birch LLP should be sent no later than December 16, 2022.

2. Receipt of supplemental or amended notice. Upon receipt of any supplemental or amended nomination notice from Pinnacle Harbor (anticipated at any time between December 12, 2022 and January 11, 2023), Calderwood & Harkness will promptly analyze the supplemental notice for compliance with all requirements of Section 2.11 and report to the Board and the Special Committee.

3. Nominee qualification and deficiency review. If a compliant nomination notice is received, Calderwood & Harkness will deliver a comprehensive nominee qualification and deficiency review to the Board within approximately four business days of receipt, addressing the completeness of the information provided, the results of preliminary due diligence on the nominees, and any remaining compliance issues.

4. Stockholder rights plan analysis. The Board should separately consider the potential adoption of a limited-duration stockholder rights plan (commonly referred to as a "poison pill") as an additional defensive measure. Calderwood & Harkness is preparing a separate analysis of the legal considerations, structural alternatives, and fiduciary duty implications associated with the adoption of a rights plan in the curre

5. Ongoing bylaw compliance. Calderwood & Harkness will continue to monitor all developments in the Pinnacle Harbor activist campaign and provide the Board with updated analysis as circumstances warrant, including any further filings by Pinnacle Harbor with the SEC, any additional communications with the Company, and any litigation threatened or commenced in connection with the advance-notice process or the proxy con

VII. Key Dates Summary The following table summarizes the key dates relevant to the advance-notice compliance analysis and the broader timeline of the Pinnacle Harbor activist campaign:

VIII. Appendices (Referenced Attachments) The following appendices are attached to this memorandum and incorporated herein by reference: Appendix A: Relevant excerpts from Article II, Section 2.11 of the Amended and Restated Bylaws of Redstone Gaming Corp. (adopted September 12, 2021), including the advance-notice timing provisions, stockholder and nominee disclosure requirements, questionnaire and representation pro