Contract analysis

I. Executive Summary The purpose of this memorandum is to provide the Special Committee of the Board of Directors of Redstone Gaming Corp. ("RGC" or the "Company") with a comprehensive analysis of the qualifications and backgrounds of the two director nominees put forward by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"), and to evaluate the nomination notice submitted on behalf of Pinnacle Harbor for compl

1. Timeliness. The Nomination Notice is timely under Article II, Section 2.11 of the Bylaws, having been received within the 150-to-120-day advance-notice window.

2. Informational Deficiencies. The Nomination Notice contains several informational deficiencies under the Bylaws, including incomplete disclosure of derivative positions, lack of clarity regarding compensation arrangements between Pinnacle Harbor and the nominees, incomplete director and officer questionnaire responses, potential issues with the form of nominee consent language, and a discrepancy in beneficial owner

3. Nominee Qualifications. Dr. Trevelyan's experience in interactive gaming operations is relevant to Pinnacle Harbor's demand for a strategic review of RGC's interactive gaming division. Mr. Grayson's financial and capital markets expertise is pertinent to capital allocation strategy and may qualify him as an "audit committee financial expert." However, both nominees' qualifications raise questions regarding gaming

4. Independence. The independence analysis under Nasdaq Rule 5605(a)(2) yields mixed results. Additional information is needed to determine whether either nominee has material relationships with Pinnacle Harbor or its affiliates that would impair independence.

5. Gaming Regulatory Licensing. Both nominees would be subject to suitability review by the Nevada Gaming Control Board and the Nevada Gaming Commission, and potentially by gaming regulators in other jurisdictions where RGC holds licenses. The timeline for such review (typically six to twelve months) raises significant practical concerns relative to the anticipated May 2023 annual meeting date. We recommend that the

II. Procedural Background A. Timeline of the Activist Campaign Leading to the Nomination The following timeline summarizes the key events in Pinnacle Harbor's activist campaign against RGC leading to the submission of the Nomination Notice: October 28, 2022: Pinnacle Harbor sends a private letter to Board Chair Diane K. Sheridan demanding that RGC appoint two new directors designated by Pinnacle Harbor and initiate a

Article II, Section 2.11 of the Bylaws provides that a stockholder wishing to nominate one or more persons for election as directors at an annual meeting must provide timely written notice to the Corporate Secretary. To be timely, such notice must be received at the principal executive offices of the Company not earlier than 150 days and not later than 120 days before the first anniversary of the date of the prior ye

III. Analysis of Nominee #1: Dr. Sandra Trevelyan A. Biographical and Professional Background Dr. Sandra Trevelyan is 55 years of age. According to the Nomination Notice and publicly available information, Dr. Trevelyan's most recent significant executive role was as Chief Operating Officer of Meridian Interactive Holdings, Inc. ("Meridian Interactive"), a Nevada-based interactive gaming company that develops and ope

IV. Analysis of Nominee #2: Hugh Desmond Grayson A. Biographical and Professional Background Hugh Desmond Grayson is 61 years of age. According to the Nomination Notice and publicly available information, Mr. Grayson's most recent significant executive role was as Chief Financial Officer of Atlas Leisure Group, Inc. ("Atlas Leisure"), a Delaware-incorporated company operating in the leisure and hospitality sector. Mr

V. Nomination Notice Deficiency Analysis A. Informational Requirements Under Article II, Section 2.11

Article II, Section 2.11 of the Bylaws imposes detailed informational requirements on any stockholder submitting a nomination notice. These requirements serve the dual purposes of enabling the Company and its stockholders to evaluate the qualifications and suitability of proposed nominees, and of ensuring transparency regarding the nominating stockholder's interests and arrangements. The following is a detailed enume

VI. Nasdaq Corporate Governance and Listing Requirements RGC's common stock is listed on the Nasdaq Global Select Market, and the Company is subject to the corporate governance requirements set forth in the Nasdaq Listing Rules, including Rule 5605 (Board of Directors and Committees). Majority Independence Requirement. Nasdaq Rule 5605(b)(1) requires that a majority of the board of directors of a listed company be co

VII. Gaming Regulatory Licensing — Comprehensive Assessment A. Applicable Regulatory Framework As a publicly traded company holding gaming licenses in Nevada and other jurisdictions, RGC operates within one of the most heavily regulated industries in the United States. The regulatory framework applicable to the Company's directors is summarized below. Nevada Gaming Control Act (NRS Chapter 463). Nevada law requires t