Jonathan,
I am writing in my capacity as outside counsel to Redstone Gaming Corp. ("RGC") in connection with the board-seat campaign initiated by your client, Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"). Our firm, Calderwood & Harkness LLP, represents RGC from our Las Vegas office at 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169.
The purpose of this letter is to propose a direct, good-faith discussion between the parties and their respective counsel to explore whether a mutually acceptable resolution can be reached in advance of RGC's 2023 annual meeting of stockholders.
**Background**
As you are aware, this matter has progressed through a number of stages since Pinnacle Harbor's private letter to Board Chair Diane K. Sheridan on October 28, 2022. Since that time, Pinnacle Harbor filed its preliminary Schedule 13D on November 10, 2022, disclosing a 6.8% stake in RGC common stock (approximately 7,119,600 shares), and followed with its November 30, 2022 public open letter demanding the appointment of Dr. Sandra Trevelyan and Hugh Desmond Grayson to the RGC Board of Directors and calling for a strategic review of RGC's interactive gaming division. Your firm subsequently transmitted a formal notice of intent to nominate directors on December 8, 2022, pursuant to Article II, Section 2.11 of RGC's Amended & Restated Bylaws, and that nomination notice was received by RGC on January 9, 2023 — within the advance-notice window, which closed on January 11, 2023. We have also noted Pinnacle Harbor's amended Schedule 13D filed on January 6, 2023, referencing its intention to pursue a proxy contest.
Both sides have now invested considerable time and resources in their respective positions.
**Authorization and Proposal**
I am authorized to advise you that a Special Committee of the RGC Board of Directors, composed of independent directors, has authorized me and Patricia Nakamura, RGC's General Counsel and Corporate Secretary (copied on this email), to engage in direct discussions with Pinnacle Harbor and its representatives regarding a potential resolution.
We would propose an initial meeting or call during the week of January 30, 2023, with participation on the RGC side from myself and Ms. Nakamura. I would ask that you indicate who from Pinnacle Harbor — whether Mr. Viktor S. Kessler and/or other appropriate representatives — would participate on your side, along with yourself or other Hargrove Sloane & Birch counsel as you see fit.
We are happy to conduct this discussion by videoconference or, if preferred, in person in New York at a mutually convenient location.
**Framework and Ground Rules**
We would propose that any discussions be conducted on a without-prejudice basis and subject to customary settlement privilege protections. Neither party would be bound by anything discussed unless and until a definitive written agreement is executed by both parties. RGC reserves all rights under its governing documents, including its Amended & Restated Bylaws and Certificate of Incorporation, and under applicable law. For the avoidance of doubt, RGC's willingness to engage in these discussions does not constitute any concession regarding the merits of Pinnacle Harbor's demands or the qualifications of its proposed nominees.
**Practical Considerations**
I think both sides recognize the practical realities at hand. RGC's 2023 annual meeting is anticipated to be held in May 2023 (the prior annual meeting was held on May 11, 2022). Both parties' interests would be well served by exploring a resolution before the proxy contest machinery fully engages — including the SEC filing obligations, submissions to and pending recommendations from proxy advisory firms such as Centurion Governance Services and Hartley Shareholder Advisory Group, and the significant expense of a contested solicitation. With both sides having already engaged proxy solicitors (Whitfield Morrow Partners for RGC; Garrison Proxy Advisors for Pinnacle Harbor) and financial advisors, the costs attendant to a full contest will only escalate from here.
**Confidentiality**
We would request that the substance of this outreach, and any subsequent discussions between the parties, be treated as confidential and not disclosed publicly or referenced in any SEC filings unless mutually agreed upon in writing or required by applicable law.
**Next Steps**
We hope that Pinnacle Harbor shares RGC's interest in a constructive dialogue. I would appreciate it if you could respond at your earliest convenience regarding Pinnacle Harbor's willingness to engage and your availability during the week of January 30. You can reach me directly at (702) 551-8200. Claire Dempsey, copied above, can also assist with scheduling logistics and can be reached at cdempsey@calderwoodharkness.com or (702) 551-8214.
I look forward to hearing from you.
Best regards,
Douglas Fairchild Partner Calderwood & Harkness LLP 3960 Howard Hughes Parkway, Suite 1400 Las Vegas, NV 89169 T: (702) 551-8200 E: dfairchild@calderwoodharkness.com
Matter Ref: 1033-00003
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