Contract analysis

I. Purpose and Executive Summary Calderwood & Harkness LLP was engaged on November 15, 2022 to advise Redstone Gaming Corp. ("RGC" or the "Company"), a Delaware corporation headquartered at 8700 Las Vegas Boulevard South, Suite 2200, Las Vegas, NV 89123, in connection with the defense against an activist board-seat campaign initiated by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor" or "PHCP"), a Delaware li

II. Overview of Pinnacle Harbor Capital Partners, LP A. Entity Structure and Key Personnel Pinnacle Harbor Capital Partners, LP is a Delaware limited partnership organized in 2014. Its general partner is Pinnacle Harbor Capital Management, LLC ("PHCM"), a Delaware limited liability company. The fund's principal office is located at 590 Madison Avenue, 34th Floor, New York, NY 10022. As of the date of this memorandum,

1. Accumulation of a 5% to 8% stake in a target mid-cap company over a period of several months, often executed during periods of relative stock price weakness or perceived strategic dislocation.

2. Initiation of a private engagement with the target company's board and management, typically through a demand letter setting forth the fund's views on strategy, governance, and capital allocation.

3. Public escalation through the filing of a Schedule 13D and, in some cases, the issuance of public letters or press releases criticizing the target company's strategic direction.

4. Formal nomination of director candidates and, where necessary, commencement of a proxy solicitation campaign in connection with the target company's annual meeting of stockholders.

5. Resolution of the campaign through a negotiated cooperation or settlement agreement, typically involving the appointment of one or two Pinnacle Harbor-designated or mutually agreed-upon directors to the target company's board, coupled with operational or strategic concessions such as a strategic review of a business unit or enhanced capital return program. This pattern is consistent with the approach Pinnacle Harb

III. Analysis of Pinnacle Harbor's Stake Accumulation A. Share Acquisition Timeline and Economics Pinnacle Harbor accumulated its position in RGC common stock over a period of approximately five months, from June 2022 through November 2022. The following table summarizes the key metrics of the stake accumulation: During the accumulation period, RGC's stock price exhibited a generally upward trajectory. The stock open

IV. Analysis of the Schedule 13D Filing (November 10, 2022) A. Filing Summary On November 10, 2022, Pinnacle Harbor filed a preliminary Schedule 13D with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules promulgated thereunder. The filing was made with respect to the shares of common stock of Redstone Gaming Corp. (SEC CIK: 0001847625). The Schedu

1. Pinnacle Harbor Capital Partners, LP — as the record and beneficial holder of the shares;

2. Pinnacle Harbor Capital Management, LLC — as the general partner of PHCP and, in that capacity, as a beneficial owner of the shares held by PHCP; and

3. Viktor S. Kessler — as the controlling person of Pinnacle Harbor Capital Management, LLC and, in that capacity, as a beneficial owner of the shares held by PHCP. The decision to file a Schedule 13D rather than a Schedule 13G is itself significant. Schedule 13G is available to investors who hold shares passively and without an intent to change or influence the control of the issuer. By filing a Schedule 13D, Pinnac

V. Analysis of the October 28, 2022 Private Demand Letter A. Content Summary On October 28, 2022, Pinnacle Harbor sent a private letter to Board Chair Diane K. Sheridan at the Company's principal office. The letter was received before the public filing of the Schedule 13D on November 10, 2022, and before any public disclosure of Pinnacle Harbor's stake or intentions. The letter bore the signature of Viktor S. Kessler

1. Board Representation. Pinnacle Harbor demanded the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors. The letter did not identify the specific nominees by name but stated that Pinnacle Harbor intended to nominate individuals with "deep expertise in interactive gaming, digital entertainment, and financial strategy" who would "enhance the Board's ability to oversee the Company's tr

2. Strategic Review of Interactive Gaming Division. Pinnacle Harbor demanded the formal engagement of independent financial advisors to evaluate strategic alternatives for the Company's interactive gaming segment. The letter specifically referenced the possibility of a sale, spin-off, or joint venture involving the interactive gaming division, and argued that the division was "significantly undervalued" within the Co

3. Capital Return. Pinnacle Harbor demanded the return of $300 million to shareholders through either a special dividend or an accelerated share repurchase program. The letter characterized the Company's current capital allocation as "inadequately disciplined" and argued that the Company was "over-retaining" cash flow that could be more productively deployed through direct returns to shareholders. The letter stated t

VI. Pinnacle Harbor's Board Nominees Although Pinnacle Harbor has not yet submitted a formal nomination notice under the Company's advance-notice bylaws, our understanding — based on the October 28 demand letter and subsequent informal communications — is that Pinnacle Harbor intends to nominate the following two individuals for election to the RGC Board of Directors at the Company's 2023 annual meeting: A. Dr. Sandr

VII. RGC Board Composition and Governance Structure A. Current Board Composition The RGC Board of Directors currently consists of nine (9) directors, of whom seven (7) are independent under applicable Nasdaq listing standards and two (2) are members of Company management. The current directors and their committee assignments are as follows: The Board maintains a strong majority of independent directors (seven of nine

VIII. Key Institutional Shareholder Landscape A. Major Holders The identity, investment philosophy, and likely posture of the Company's major institutional shareholders will be critical in any contested election. The following is a summary of the most significant disclosed holders, based on publicly available filings and information available to Calderwood & Harkness as of the date of this memorandum: Ridgeway Asset

IX. Advisory Team and Coordination The Company has assembled a team of experienced advisors to support its response to the Pinnacle Harbor campaign. Effective coordination among these advisors will be essential to the success of the Company's defensive strategy. The advisory team and their respective roles are set forth below. A. Calderwood & Harkness LLP — Outside Counsel Calderwood & Harkness LLP was engaged as out

X. Preliminary Defensive Strategy Recommendations Based on our initial assessment, we recommend the following defensive strategy, organized into three phases: immediate actions (completed or underway), near-term actions (to be completed within the next 30 days), and medium-term strategic considerations. A. Immediate Actions (Completed or Underway) The following actions have been completed or are currently underway:

1. Engagement of Advisors. Calderwood & Harkness LLP (outside counsel), Calloway Pinnacle Trust Bank (financial advisor), Whitfield Morrow Partners, LLC (proxy solicitor), and Harlan Ridge Communications, LLC (investor relations advisor) have been engaged. All engagements were completed between November 14 and November 15, 2022. Each advisor has been briefed on the situation and has commenced initial work.

2. Special Committee Formation. The Special Committee of the Board, consisting of independent directors Jim Delacroix (Chair), Carmen Vasquez, and Randall Morse, was formed by Board resolution on November 14, 2022. The Special Committee has been authorized to oversee all aspects of the Company's response to the Pinnacle Harbor campaign.

3. D&O Notice of Circumstances. A notice of circumstances was submitted to Northbridge Indemnity Company and Creston National Insurance Co. on November 16, 2022, through the Company's insurance broker, Glenmore Caulfield Insurance Brokers, Inc.

4. Schedule 13D Review. An initial review of Pinnacle Harbor's Schedule 13D filing has been completed. A detailed compliance analysis, including group formation analysis and timeliness review, is in progress and will be delivered in a separate memorandum.

5. Bylaw and Charter Review. A comprehensive review of the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws is in progress. Completion of the initial review is targeted for November 22, 2022. A full defensive review memorandum, including identification of potential bylaw amendments, is targeted for delivery by December 5, 2022. B. Near-Term Actions (Next 30 Days) The followi

1. Response to October 28 Demand Letter. We recommend that the Board authorize the preparation and delivery of a written response from Board Chair Diane K. Sheridan to Viktor S. Kessler, acknowledging receipt of the October 28 demand letter, expressing the Board's willingness to engage constructively with Pinnacle Harbor, and defending the Board's strategic direction and governance practices. The response should be c

2. Bylaw and Charter Defensive Review. Calderwood & Harkness will complete a comprehensive analysis of all defensive provisions in the Company's governing documents, including the advance-notice provisions (Article II, Section 2.11), the Board's authority to fill vacancies and newly created directorships, any supermajority voting requirements, the exclusive forum provision, and any other provisions relevant to the Co

3. Advance-Notice Window Preparation. The advance-notice window under Article II, Section 2.11 of the Bylaws opens on December 12, 2022, and closes on January 11, 2023. Calderwood & Harkness will prepare a compliance analysis framework in advance of the window opening so that any nomination notice received from Pinnacle Harbor can be promptly evaluated for compliance with the substantive and procedural requirements o

4. Stockholder Rights Plan ("Poison Pill") Analysis. Calderwood & Harkness will prepare an analysis of whether the Board should consider adopting a limited-duration stockholder rights plan as a defensive measure. This analysis will address the fiduciary duty implications under Delaware law (including the standards established by the Delaware Court of Chancery and the Delaware Supreme Court), the perspectives of the p

5. Shareholder Outreach Strategy. Calderwood & Harkness, in coordination with Whitfield Morrow Partners and Harlan Ridge Communications, will develop a comprehensive shareholder engagement strategy focused on the Company's key institutional holders, including Ridgeway Asset Management, Stillwater Capital Advisors, and Canfield Municipal Employees' Retirement System. This strategy will include a messaging framework, t

6. Nominee Due Diligence. Upon receipt of a formal nomination notice from Pinnacle Harbor, Calderwood & Harkness will coordinate with appropriate investigative resources to conduct a thorough background investigation of each proposed nominee, including Dr. Sandra Trevelyan and Hugh Desmond Grayson. The due diligence will include analysis of each nominee's independence under Nasdaq listing standards, evaluation of any

1. Interactive Gaming Division Valuation and Strategic Positioning. A core element of Pinnacle Harbor's investment thesis is the assertion that the Company's interactive gaming division is "significantly undervalued" within the Company's existing corporate structure. To counter this argument, the Company will need to develop a robust and data-driven defense of its current strategy for the interactive gaming division.

2. Capital Allocation Defense. Pinnacle Harbor's demand for the return of $300 million to shareholders through a special dividend or accelerated share repurchase program directly challenges the Company's capital allocation policy. The Board should be prepared to defend its current approach, including its 1.8% dividend yield, its existing share repurchase programs, and its reinvestment in growth initiatives. Calloway