Contract analysis

I. Purpose This memorandum documents the preparation, submission, and delivery of a formal notice of circumstances to the directors and officers liability insurance carriers of Redstone Gaming Corp. ("RGC" or the "Company") in connection with the activist board-seat campaign initiated by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"). The notice was submitted to the Company's primary D&O liability carrier,

II. Background — The Activist Campaign A. Pinnacle Harbor's Stake Accumulation Pinnacle Harbor Capital Partners, LP is a Delaware limited partnership whose general partner is Pinnacle Harbor Capital Management, LLC. Pinnacle Harbor operates as an event-driven and activist hedge fund with approximately $4.2 billion in assets under management. The fund is headquartered at 590 Madison Avenue, 34th Floor, New York, New Y

III. D&O Insurance Program — Policy Summary Set forth below is a summary of the relevant layers of RGC's directors and officers liability insurance program for the current policy year. The program is structured as a primary layer with one excess layer, forming a total D&O insurance tower of $25,000,000. The insurance program was placed and is administered through the Company's insurance broker, Glenmore Caulfield Ins

IV. Notice of Circumstances — Content and Delivery A. Form of Notice A formal written notice of circumstances was prepared by Marcus Leung at Calderwood & Harkness LLP, in consultation with Douglas Fairchild and Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp. The notice was submitted to both Northbridge Indemnity Company and Creston National Insurance Co. through the insura

1. Stake Accumulation and Schedule 13D Filing. The accumulation by Pinnacle Harbor Capital Partners, LP of approximately 7,119,600 shares of RGC common stock, representing a 6.8% ownership stake, and the filing of a preliminary Schedule 13D with the SEC on November 10, 2022, publicly disclosing the activist fund's position and activist intentions.

2. Private Demand Letter. Pinnacle Harbor's October 28, 2022 private Demand Letter to Board Chair Diane K. Sheridan, in which Pinnacle Harbor demanded the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors, a formal strategic review of the interactive gaming division (including potential sale or spin-off), and a $300 million capital return to shareholders through a special dividend o

3. Potential Proxy Contest. The potential for a contested proxy solicitation at the 2023 RGC Annual Meeting of Stockholders, in which Pinnacle Harbor may nominate its two candidates — Dr. Sandra Trevelyan and Hugh Desmond Grayson — for election to the Board in opposition to the Company's incumbent nominees.

4. Potential Related Litigation. The potential for related litigation, including but not limited to: (a) actions under the Delaware General Corporation Law challenging Board actions, defensive measures, or corporate governance decisions taken in response to the activist campaign; (b) federal securities law claims, including claims under Sections 14(a) and 14(e) of the Securities Exchange Act of 1934, as amended, rela

5. Potential Regulatory Inquiries. The potential for regulatory inquiries or investigations related to SEC filings, proxy solicitation compliance, and gaming regulatory matters. RGC operates in a highly regulated industry, and actions taken by the Board in response to the activist campaign — or the introduction of new board members with activist ties — could trigger scrutiny by state gaming regulatory authorities in

1. Email Transmission. Sarah Voss of Glenmore Caulfield Insurance Brokers, Inc. transmitted the notice of circumstances via email to the designated notice contacts at Northbridge Indemnity Company and Creston National Insurance Co. on November 16, 2022. The email included the full text of the notice letter as an attachment in PDF format and requested written confirmation of receipt.

2. Overnight Courier. Concurrently, Sarah Voss transmitted hard copies of the notice of circumstances via overnight courier (FedEx, priority overnight) to the designated notice addresses for Northbridge Indemnity Company and Creston National Insurance Co. Tracking numbers for the overnight courier shipments have been retained in the matter file.

3. Copies to Counsel and Client. Copies of the notice, including confirmation of transmittal, were provided to Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of RGC, and to Douglas Fairchild, Engagement Partner at Calderwood & Harkness LLP. Ms. Nakamura has retained copies in the Company's insurance records. The dual-method delivery (email and overnight courier) was employed to ensure timely recei

V. Coverage Considerations A. Potential Covered Defense Costs The following categories of defense costs and expenses may be covered under the D&O insurance program, subject to the terms, conditions, exclusions, and retention provisions of the applicable policies: Outside Counsel Fees — Calderwood & Harkness LLP. Calderwood & Harkness's fees in connection with the defense of the activist campaign, potential litigation

1. Premium Impact. Carriers may seek to increase premiums for the renewal period in light of the reported activist campaign and the potential for claims.

2. Exclusion of Reported Circumstances. Renewal policies may include a specific exclusion for claims arising from the circumstances reported in the notice of circumstances. This is a standard market practice, as the purpose of the notice of circumstances mechanism is to allocate those circumstances to the current policy year; the renewal policy would then exclude those circumstances from its coverage.

3. Continuity of Coverage. Coordination with Glenmore Caulfield Insurance Brokers, Inc. (Sarah Voss) is recommended to ensure a seamless transition of coverage to the renewal policy period and to ensure that the reported circumstances are properly "linked" to the current 2022 policy year. Any gap or ambiguity in the allocation of circumstances between the expiring and renewal policies could result in coverage dispute

VI. Coordination and Next Steps A. Broker Communication On November 16, 2022, Marcus Leung spoke by telephone with Sarah Voss, Senior Vice President at Glenmore Caulfield Insurance Brokers, Inc., to confirm receipt of the notice of circumstances and to discuss the anticipated carrier response timeline. Ms. Voss confirmed that she had received the notice package and that she would transmit the notice to both Northbrid

VII. Attachments The following documents are appended to this memorandum for reference: Attachment A: Copy of Notice of Circumstances letter submitted to Northbridge Indemnity Company and Creston National Insurance Co. (via Glenmore Caulfield Insurance Brokers, Inc.), dated November 16, 2022. Attachment B: Policy declarations page — Northbridge Indemnity Company, Policy No. NBI-DOP-1025-00008 (policy period: January