1033-00003 · Redstone Gaming Corp · Memos & Analyses

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Board of Directors, Redstone Gaming Corp. Patricia "Trish" Nakamura, General Counsel & Corporate Secretary, Redstone Gaming Corp.

FROM: Douglas Fairchild, Engagement Partner, and Claire Dempsey, Lead Associate, Calderwood & Harkness LLP

DATE: December 14, 2022

RE: Advance-Notice Bylaw Compliance Analysis — Pinnacle Harbor Capital Partners, LP Formal Notice of Intent to Nominate Directors

Matter No.: 1033-00003

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 Redstone Gaming Corp. (the "Company" or "RGC"), as last amended on September 12, 2021 (the "Bylaws"). This memorandum is intended to provide the Board of Directors (the "Board") and the Company's General Counsel and Corporate Secretary with a detailed compliance assessment, a catalogue of identified deficiencies, and a recommended course of action with respect to the Nomination Notice.

Summary of Principal Conclusions. Our analysis yields the following principal conclusions:

First, with respect to timeliness, the advance-notice window under Section 2.11 of the Bylaws opens on December 12, 2022 — that is, the 150th day before the first anniversary of the 2022 Annual Meeting of Stockholders held on May 11, 2022 — and closes on January 11, 2023 — that is, the 120th day before such anniversary. The Nomination Notice was delivered on December 8, 2022, which is four calendar days before the window opened. Under the plain language of Section 2.11, which requires that notice be delivered "not earlier than the 150th day" before the anniversary date, the December 8 notice is premature and therefore technically outside the permissible nomination window. This creates a potential timeliness deficiency. As discussed in greater detail in Section III below, we analyze whether this premature delivery constitutes a curable defect or grounds for outright rejection, taking into account the text of the Bylaws, relevant Delaware case law, and practical strategic considerations.

Second, notwithstanding the timeliness issue, Pinnacle Harbor retains the ability to refile or supplement a compliant notice at any time until the close of the advance-notice window on January 11, 2023. Given the likelihood that Pinnacle Harbor will do so, the Board should plan its defensive preparations on the assumption that a substantively compliant nomination notice will ultimately be delivered.

Third, beyond the timeliness question, the Nomination Notice as delivered on December 8 contains several informational deficiencies with respect to the requirements of Section 2.11, including the omission of nominee residence addresses, an incomplete five-year directorship history for at least one nominee, the failure to attach completed director questionnaires and signed representation and agreement letters for either nominee, and the absence of signed consent letters. These deficiencies are catalogued in detail in Section V below.

Fourth, although not strictly a bylaw requirement, the Nomination Notice does not address gaming regulatory suitability or the nominees' willingness to submit to licensing review by the Nevada Gaming Control Board and other applicable regulatory authorities — a matter of significant operational importance for the Company. Additionally, the Nomination Notice does not contain an explicit compliance statement under SEC Rule 14a-19 (the universal proxy rule), which became effective for meetings held after August 31, 2022.

This memorandum concludes by providing the Board with a framework for evaluating whether to reject the Nomination Notice, demand cure and supplementation, or await a timely resubmission within the advance-notice window, together with a recommended response strategy designed to preserve the Board's rights under the Bylaws while minimizing unnecessary litigation risk.

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 equity fund focused on the consumer discretionary and gaming sectors, and it has a track record of activist engagements with mid-cap and large-cap public companies in the gaming, hospitality, and leisure industries.

Between June 2022 and November 2022, Pinnacle Harbor accumulated a stake of approximately 6.8% of the outstanding shares of RGC common stock, representing 7,119,600 shares out of 104,700,000 shares outstanding. Shares were acquired on the open market at a weighted-average purchase price of approximately $26.42 per share, reflecting a total cost basis of approximately $188.1 million. The accumulation was conducted in a manner designed to remain below the 5% reporting threshold under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for as long as possible, with Pinnacle Harbor crossing the 5% threshold in or around late September 2022 and filing its initial Schedule 13D on November 10, 2022, as described below.

On October 28, 2022, Pinnacle Harbor sent a private letter to Board Chair Diane K. Sheridan demanding three categories of action by the Company. First, Pinnacle Harbor demanded the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors. Second, Pinnacle Harbor demanded that the Board initiate a formal strategic review of the Company's interactive gaming division, which generated fiscal year 2021 revenue of approximately $412 million, representing approximately 14.4% of the Company's total revenue of $2.87 billion for that fiscal year. Pinnacle Harbor's letter characterized the interactive gaming division as "chronically undervalued within the conglomerate structure" and advocated for a potential sale, spin-off, or other separation transaction. Third, Pinnacle Harbor demanded the return of $300 million to stockholders through either a special dividend or an accelerated share repurchase program, characterizing the Company's capital allocation strategy as "overly conservative" in light of its balance sheet capacity and free cash flow generation.

On November 10, 2022, Pinnacle Harbor filed a preliminary Schedule 13D with the Securities and Exchange Commission (the "SEC") disclosing its 6.8% stake in RGC common stock and its activist intent, including the substance of the demands communicated in the October 28 private letter. The Schedule 13D filing attracted immediate market attention and media coverage, with several sell-side analysts publishing commentary on the potential merits and risks of the Pinnacle Harbor campaign.

On November 14, 2022, the RGC Board held a special emergency meeting to discuss the Pinnacle Harbor activist campaign and the Company's response strategy. At that meeting, the Board resolved to form a Special Committee of independent directors to oversee the Company's response, consisting of Jim Delacroix (Chair of the Special Committee), Carmen Vasquez, and Randall Morse. The Board further resolved to engage outside counsel and other professional advisors to assist with the Company's defense.

Calderwood & Harkness LLP was formally engaged by the Company on November 15, 2022, to serve as special outside counsel to the Board and the Special Committee in connection with the Pinnacle Harbor activist campaign. The scope of the engagement encompasses, among other things, bylaw and charter analysis, advance-notice compliance review, proxy contest preparation, and related corporate governance advisory services.

On November 30, 2022, Pinnacle Harbor escalated its campaign by issuing a public "open letter" to the Board and stockholders of RGC. The open letter reiterated Pinnacle Harbor's prior demands and, for the first time, publicly identified its two proposed Board nominees: Dr. Sandra Trevelyan and Hugh Desmond Grayson. The open letter stated that if the Company did not voluntarily appoint these nominees to the Board, Pinnacle Harbor would nominate them for election at the Company's 2023 Annual Meeting of Stockholders and conduct a proxy solicitation in support of their election. The open letter was filed with the SEC as additional soliciting material and was disseminated to the financial media.

On December 5, 2022, Calderwood & Harkness delivered to the Board and Special Committee its comprehensive Bylaw and Charter Defensive Review Memorandum, which analyzed the Company's existing governance documents, identified the advance-notice provisions and other structural defenses available to the Board, and recommended certain preparatory actions. This current memorandum builds upon and supplements the analysis presented in the December 5 memorandum.

B. The December 8 Formal Notice

On December 8, 2022, Jonathan "Jon" Birch III, lead partner at Hargrove Sloane & Birch LLP, located at 1585 Broadway, 40th Floor, New York, New York 10036, transmitted a formal written notice of intent to nominate directors (the "Nomination Notice") to Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp., at the Company's principal executive offices located at 8700 Las Vegas Boulevard South, Suite 2200, Las Vegas, Nevada 89123. The Nomination Notice was transmitted on behalf of Pinnacle Harbor Capital Partners, LP as the nominating stockholder.

The Nomination Notice purports to comply with the requirements of Article II, Section 2.11 of the Amended and Restated Bylaws of the Company and identifies two individuals as nominees for election to the Board of Directors at the 2023 Annual Meeting of Stockholders: (1) Dr. Sandra Trevelyan, age 55, former Chief Operating Officer of Meridian Interactive Holdings, Inc.; and (2) Hugh Desmond Grayson, age 61, former Chief Financial Officer of Atlas Leisure Group, Inc.

The Nomination Notice was delivered via overnight courier (Severin Partners LLC Priority Overnight) and concurrently transmitted via email to Ms. Nakamura's corporate email address. The physical copy was received and logged by the Company's corporate offices on December 8, 2022, and forwarded to Ms. Nakamura and to Calderwood & Harkness the same day. A copy of the Nomination Notice is attached hereto as Appendix B.

C. The Pinnacle Harbor Board Nominees

The Nomination Notice identifies the following two individuals as nominees for election to the RGC Board of Directors:

Dr. Sandra Trevelyan (Nominee #1), age 55, is the former Chief Operating Officer of Meridian Interactive Holdings, Inc., a Nevada corporation engaged in the development and operation of interactive gaming platforms. Dr. Trevelyan served as COO of Meridian Interactive from 2014 to 2020. She currently operates as an independent gaming industry consultant, advising companies in the interactive and digital gaming sectors. According to the Nomination Notice, Dr. Trevelyan holds a Ph.D. in applied mathematics from the Massachusetts Institute of Technology and an M.B.A. from the Wharton School of the University of Pennsylvania. The Nomination Notice describes Dr. Trevelyan as having "deep expertise in interactive gaming, digital transformation, and operational efficiency," which Pinnacle Harbor asserts would complement the Board's existing skill set.

Hugh Desmond Grayson (Nominee #2), age 61, is the former Chief Financial Officer of Atlas Leisure Group, Inc., a Delaware corporation that operated hospitality and entertainment assets across the western United States until its acquisition by a private equity consortium in 2019. Mr. Grayson served as CFO of Atlas Leisure from 2013 to 2019 and, according to the Nomination Notice, played a central role in the sale process. He currently serves as a director of two private hospitality companies, which the Nomination Notice identifies by name. The Nomination Notice describes Mr. Grayson as having "extensive experience in capital allocation, M&A transaction execution, and corporate governance in the hospitality and gaming industries."

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.

For purposes of Section 2.11, the term "timely" is defined as follows: to be timely, a stockholder's notice must be delivered to the Corporate Secretary "not earlier than the 150th day and not later than the 120th day before the first anniversary of the date of the preceding year's annual meeting of stockholders." The Bylaws further provide that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary of the prior year's annual meeting, different notice deadlines apply; however, because the Company has not announced any change to the anticipated date of the 2023 Annual Meeting, the standard window calculation applies here.

B. Calculation. The calculation of the advance-notice window for nominations at the 2023 Annual Meeting of Stockholders is as follows:

Step 1: Identify the date of the preceding year's annual meeting. The 2022 Annual Meeting of Stockholders of Redstone Gaming Corp. was held on May 11, 2022. This date is established by the Company's Current Report on Form 8-K filed with the SEC on May 12, 2022, and the definitive proxy statement filed on Schedule 14A on March 29, 2022.

Step 2: Determine the first anniversary of the 2022 Annual Meeting. The first anniversary of the May 11, 2022 annual meeting is May 11, 2023.

Step 3: Calculate the opening of the advance-notice window (150 days before May 11, 2023). Counting backward 150 calendar days from May 11, 2023 yields December 12, 2022. Accordingly, the advance-notice window opens on December 12, 2022, and the earliest date on which a compliant nomination notice may be delivered is December 12, 2022.

Step 4: Calculate the closing of the advance-notice window (120 days before May 11, 2023). Counting backward 120 calendar days from May 11, 2023 yields January 11, 2023. Accordingly, the advance-notice window closes on January 11, 2023, and the latest date on which a compliant nomination notice may be delivered is January 11, 2023.

The permissible nomination window under Section 2.11 of the Bylaws is December 12, 2022 through January 11, 2023, inclusive. A detailed calculation worksheet is attached hereto as Appendix C.

C. Timeliness of the December 8, 2022 Notice

Pinnacle Harbor's Nomination Notice was delivered to the Company's Corporate Secretary on December 8, 2022, as confirmed by the Severin Partners LLC delivery receipt and email timestamp. The advance-notice window under Section 2.11 does not open until December 12, 2022. Accordingly, the December 8 Nomination Notice was delivered four calendar days before the advance-notice window opened and is therefore premature under the plain language of Section 2.11.

The question presented is whether a premature nomination notice — one delivered before the "not earlier than" date specified in the bylaw — is defective and subject to rejection, or whether it may be deemed timely or treated as a curable irregularity. We analyze this question below.

Strict textual analysis. Section 2.11 of the Bylaws provides that a stockholder's notice must be delivered "not earlier than" the 150th day before the anniversary of the prior year's annual meeting. The phrase "not earlier than" establishes a clear temporal boundary: a notice delivered before that date is, by definition, outside the permissible window and therefore not "timely" as defined by the Bylaws. Under a strict reading of the provision, the December 8 Nomination Notice is untimely, and the Board would be within its rights to reject the notice as non-compliant.

Delaware case law considerations. Delaware courts have generally upheld advance-notice bylaws as drafted and have recognized the legitimate corporate purpose served by such provisions, including orderly management of the proxy process, adequate time for the board and stockholders to evaluate nominees, and prevention of ambush nominations. See, e.g., Openwave Sys. Inc. v. Harbinger Capital Partners Master Fund I, Ltd., 924 A.2d 228 (Del. Ch. 2007); AB Value Partners, LP v. Kreisler Mfg. Corp., 2014 WL 7150465 (Del. Ch. Dec. 16, 2014). Courts have generally enforced "not earlier than" and "not later than" deadlines as written.

At the same time, the Delaware Court of Chancery has on occasion considered whether strict enforcement of advance-notice provisions under the particular circumstances would be inequitable, particularly where the substance of the notice was adequate, the board suffered no prejudice from the timing irregularity, and the board's enforcement of the provision appeared to be motivated primarily by a desire to entrench incumbent directors. See Hubbard v. Hollywood Park Realty Enters., Inc., 1991 WL 3151 (Del. Ch. Jan. 14, 1991) (analyzing advance-notice requirements in the context of the board's fiduciary duties). However, the mere fact that a notice was delivered early — rather than late — may weigh against a finding of inequity, because the board's interest in orderly procedure is arguably less compromised by early notice (which gives the board more time to evaluate nominees) than by late notice.

There is limited Delaware authority directly addressing the enforceability of a "not earlier than" deadline as applied to a nomination notice that is otherwise substantively complete. We are not aware of any Delaware decision holding that a board is required to accept a premature nomination notice or that rejection of a premature notice constitutes a breach of fiduciary duty, provided the bylaw itself is valid and was not adopted for an inequitable purpose. However, there is also no authority conclusively establishing that a board must reject a premature notice.

Practical and strategic considerations. Several practical and strategic factors counsel against outright rejection of the December 8 Nomination Notice on timeliness grounds alone at this time:

First, Pinnacle Harbor has until January 11, 2023, to refile or supplement a compliant nomination notice within the advance-notice window. If the Board rejects the December 8 notice on timeliness grounds, Pinnacle Harbor will almost certainly simply refile the same notice (corrected for informational deficiencies) on or after December 12, 2022. Rejection would therefore accomplish little other than a brief procedural delay.

Second, outright rejection of the December 8 notice could be perceived — by a court, by ISS and Tarrant Partners LLC, and by the Company's stockholders — as a defensive tactic designed to impede a legitimate stockholder nomination rather than as a good-faith enforcement of procedural requirements. This perception could adversely affect the Board's credibility in a subsequent proxy contest and could invite a challenge in the Delaware Court of Chancery.

Third, the Board's credibility and optionality are better preserved by a measured response that identifies the timeliness issue and informational deficiencies, requests cure, and reserves all rights, rather than by an adversarial rejection that could precipitate litigation before the nomination process has even been finalized.

Fourth, the Company remains in the early stages of its engagement with Pinnacle Harbor, and there may be opportunities for constructive dialogue, including potential settlement discussions involving Board composition. An unduly aggressive posture at this stage could foreclose such opportunities.

Recommendation on timeliness. For the foregoing reasons, we recommend that the Board not affirmatively reject the December 8 Nomination Notice on timeliness grounds alone at this time. Instead, we recommend that the Corporate Secretary send a response letter to Hargrove Sloane & Birch LLP identifying the timeliness issue (delivery four days before the advance-notice window opened on December 12, 2022), identifying the informational deficiencies catalogued in Section V below, and requesting that Pinnacle Harbor deliver a compliant supplemental or amended notice within the advance-notice window (no later than January 11, 2023). The response letter should expressly state that the Company reserves all rights under the Bylaws with respect to any failure to comply with Section 2.11, without waiver. A draft response letter is attached hereto as Appendix D.

This approach preserves the Board's rights under the Bylaws — including the right to reject a non-compliant notice if Pinnacle Harbor fails to cure — while avoiding unnecessary litigation risk and maintaining a posture of procedural good faith.

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 on nominees, and (iii) ensuring compliance with applicable SEC disclosure rules and Nasdaq listing standards.

The required disclosures fall into several broad categories: (1) information about the nominating stockholder and its associated persons (including ownership, derivative positions, hedging arrangements, voting agreements, and intent to solicit proxies); (2) information about each proposed nominee (including biographical and background information, beneficial ownership, and five-year directorship history); (3) procedural requirements (including completion of the Company's standard director questionnaire, execution of a written representation and agreement, and written consent to be named and to serve); and (4) such other information as would be required to be disclosed in a proxy statement or other filing pursuant to Regulation 14A under the Exchange Act.

We analyze each category below with reference to the content of the December 8 Nomination Notice.

B. Stockholder / Beneficial Owner Information

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, controlled by, or under common control with the nominating stockholder, and any member of the immediate family of the foregoing sharing the same household).

December 8 Notice Content. The Nomination Notice identifies Pinnacle Harbor Capital Partners, LP as the nominating stockholder and provides its business address as 590 Madison Avenue, 34th Floor, New York, New York 10022. The notice further identifies Pinnacle Harbor Capital Management, LLC as the general partner of Pinnacle Harbor Capital Partners, LP, and identifies Viktor S. Kessler (Managing Partner and Chief Investment Officer) and Nadia Johar (Head of Activism and Portfolio Manager) as the principals of the general partner with authority over investment and voting decisions with respect to the shares held by Pinnacle Harbor. The notice discloses beneficial ownership of 7,119,600 shares of RGC common stock, representing approximately 6.8% of the 104,700,000 shares of common stock outstanding.

Assessment: Appears substantially compliant. The identity, address, and ownership disclosures in the Nomination Notice are consistent with the requirements of Section 2.11 and are generally consistent with the information disclosed in Pinnacle Harbor's Schedule 13D filing dated November 10, 2022. We recommend cross-referencing the share ownership figure disclosed in the Nomination Notice (7,119,600 shares) against the most recent Schedule 13D or Schedule 13D/A to confirm consistency and to determine whether Pinnacle Harbor has acquired additional shares since the November 10 filing. If there is a discrepancy, the Board should request an updated ownership disclosure.

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 beneficial owner on whose behalf the nomination is being made, or any associated person of the foregoing. This requirement is designed to ensure that the Board and stockholders have a complete picture of the nominating stockholder's economic interest in the Company, including any positions that decouple economic ownership from voting power.

December 8 Notice Content. The Nomination Notice includes a representation that Pinnacle Harbor, its general partner, and its principals do not hold any derivative positions, hedging arrangements, or short interests with respect to the Company's securities, and that the shares disclosed are held on a long-only basis.

Assessment: Facially compliant. The representation of "none" with respect to derivative and hedging positions satisfies the formal requirements of Section 2.11 on its face. However, we recommend that the Company verify this representation against the derivative position disclosures in Pinnacle Harbor's Schedule 13D filing and any subsequent amendments. If any discrepancy is identified, the Board should request clarification and supplementation. We also note that the representation in the Nomination Notice is as of an unspecified date; it would be advisable to request that any supplemental notice confirm derivative and hedging positions as of a date proximate to the supplemental filing.

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 arrangement with respect to any matter to be acted upon at the annual meeting.

December 8 Notice Content. The Nomination Notice references the engagement of Garrison Proxy Advisors, LLC, with Alicia Trent serving as Managing Director, as Pinnacle Harbor's proxy solicitation advisor in connection with the anticipated proxy contest. The Nomination Notice does not disclose any voting agreements, voting commitments, or arrangements with any other stockholder of the Company relating to the nomination or the voting of shares. The notice also does not disclose the formation of a "group" with any other stockholder for purposes of Section 13(d) of the Exchange Act.

Assessment: Appears compliant. The disclosure of the Garrison Proxy Advisors engagement is responsive to the requirement, and the absence of any disclosed voting agreements is consistent with what we would expect at this relatively early stage of the activist campaign. However, we recommend that the Company monitor for any group formation issues under Section 13(d) of the Exchange Act, including any amended Schedule 13D filings by Pinnacle Harbor that disclose the formation of a group or any agreements with other stockholders. If evidence of undisclosed voting agreements or group activity comes to light, the Board should promptly raise the issue and request supplementation.

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 elect the nominee(s) and/or otherwise to solicit proxies or votes from stockholders in support of the nomination(s).

December 8 Notice Content. The Nomination Notice includes a clear statement that Pinnacle Harbor intends to solicit proxies from the Company's stockholders in support of the election of Dr. Trevelyan and Mr. Grayson at the 2023 Annual Meeting of Stockholders if the Company does not voluntarily appoint them to the Board prior to such meeting.

Assessment: Compliant. The proxy solicitation intent representation satisfies the requirements of Section 2.11 on its face.

C. Nominee Information

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 held by the nominee during the preceding five years; and (d) such other information regarding the nominee as would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies for the election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

December 8 Notice Content. The Nomination Notice provides biographical summaries for both nominees.

With respect to Dr. Sandra Trevelyan, the Nomination Notice provides her name, age (55), and business address. It describes her former position as Chief Operating Officer of Meridian Interactive Holdings, Inc. (a Nevada corporation) from 2014 to 2020 and her current role as an independent gaming consultant. The notice lists one prior directorship held within the past five years — specifically, a board seat at an unspecified interactive gaming industry association. The notice provides Dr. Trevelyan's educational background and a narrative description of her qualifications.

With respect to Hugh Desmond Grayson, the Nomination Notice provides his name, age (61), and business address. It describes his former position as Chief Financial Officer of Atlas Leisure Group, Inc. (a Delaware corporation) from 2013 to 2019 and his current service as a director of two private hospitality companies, which are identified by name in the notice. The notice provides a narrative description of Mr. Grayson's qualifications and experience.

Assessment: Partially deficient. Two deficiencies are identified:

First, residence addresses are not provided for either nominee. Section 2.11 explicitly requires disclosure of the "residence address" of each nominee, in addition to the nominee's business address. The Nomination Notice provides business addresses for both Dr. Trevelyan and Mr. Grayson but omits their residence addresses. This is a clear informational deficiency that must be cured.

Second, the five-year directorship history for Dr. Trevelyan may be incomplete. The Nomination Notice lists only one prior directorship for Dr. Trevelyan during the preceding five years. However, given Dr. Trevelyan's current role as an independent gaming consultant and the breadth of her industry experience, it is plausible that she holds or has held additional board or advisory positions that should have been disclosed. The Board should request a complete and verified five-year directorship history for Dr. Trevelyan. Additionally, although Mr. Grayson's two current private-company directorships are identified, his full five-year history should be confirmed as complete.

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 ownership satisfies the requirement on its face.

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 become a party to any agreement, arrangement, or understanding with, and has not given any commitment or assurance to, any person or entity as to how the nominee, if elected as a director of the Company, will act or vote on any issue or question, except as disclosed in the representation and agreement;

(b) A representation that the nominee is not and will not become a party to any agreement, arrangement, or understanding with any person or entity, other than the Company, with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director of the Company, except as disclosed in the representation and agreement;

(c) A commitment that the nominee will comply with all applicable corporate governance, confidentiality, stock ownership, and trading policies and guidelines of the Company, including any policies adopted after the nominee's election, and that the nominee will promptly provide any information reasonably requested by the Company for inclusion in the Company's public filings; and

(d) A commitment that the nominee will comply with all applicable rules and listing standards of the Nasdaq Stock Market regarding director independence and financial literacy, and will submit such information as may be necessary to permit the Company to determine the nominee's qualification as an "independent director" under applicable Nasdaq rules.

December 8 Notice Content. The Nomination Notice includes a general statement that both Dr. Trevelyan and Mr. Grayson "are willing to complete the Company's standard director questionnaire upon receipt and to execute such representation and agreement letters as the Company may reasonably require." However, the Nomination Notice does not attach completed director questionnaires for either nominee, nor does it attach signed representation and agreement letters.

Assessment: Deficient. The failure to include completed questionnaires and executed representation and agreement letters is a material omission. Section 2.11 provides that the nominating stockholder's notice must include — as part of the notice itself — the completed questionnaire and signed representation and agreement for each nominee. A general statement of willingness to complete these documents in the future does not satisfy the bylaw requirement, which calls for the documents to accompany the notice. The Board should require that completed and signed questionnaires and representation and agreement letters be provided as a condition to accepting the Nomination Notice. To facilitate cure, the Corporate Secretary should promptly transmit the Company's standard form questionnaire and representation and agreement to Hargrove Sloane & Birch LLP with the response letter.

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 jurisdictions where the Company operates. Under the Nevada Gaming Control Act (NRS Chapter 463) and the regulations promulgated thereunder, persons who serve as directors, officers, or key employees of a gaming licensee may be required to undergo suitability investigations and obtain individual gaming licenses or findings of suitability from the NGCB and, in some cases, from gaming regulatory authorities in other jurisdictions. The failure of a director to obtain or maintain a required gaming license could result in adverse regulatory consequences for the Company, including disciplinary action, conditions on the Company's gaming licenses, or, in extreme cases, suspension or revocation of the Company's gaming licenses.

December 8 Notice Content. The Nomination Notice does not contain any reference to gaming regulatory suitability, licensability, or willingness of either nominee to submit to suitability investigations by the NGCB or other gaming regulatory authorities.

Assessment: The Nomination Notice does not address gaming regulatory considerations. While the absence of a gaming regulatory suitability representation may not constitute a strict bylaw deficiency, it is a matter of significant practical and operational concern for the Company. The Board should raise this issue in its response to Pinnacle Harbor and request that both nominees confirm their willingness and ability to apply for, submit to suitability investigations for, and maintain any and all gaming licenses, findings of suitability, or other regulatory approvals required in connection with service as a director of the Company. Non-licensability — whether due to background issues, unwillingness to submit to investigation, or inability to satisfy regulatory requirements — could effectively disqualify a nominee from service on the Board, regardless of whether the nominee is elected by stockholders.

D. Additional Requirements

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. Trevelyan and Mr. Grayson consent to being named as nominees in any proxy statement filed in connection with the 2023 Annual Meeting and agree to serve as directors of the Company if duly elected." However, no separate signed consent letters from the nominees themselves are attached to the Nomination Notice.

Assessment: Potentially deficient. While the general statement of consent in counsel's letter may be viewed as a good-faith effort to comply, best practice — and a reasonable reading of Section 2.11 — calls for separate, individually signed written consents from each nominee, rather than a blanket statement attributed to the nominees by their counsel. The Board should request that signed consent letters from each nominee be provided as part of the supplemental notice.

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 nominees. This notice must be provided no later than 60 calendar days prior to the anniversary of the previous year's annual meeting. For the 2023 Annual Meeting (with the 2022 Annual Meeting having been held on May 11, 2022), the Rule 14a-19 notice deadline is 60 days before May 11, 2023, or approximately March 12, 2023. The December 8 Nomination Notice, if viewed as a Rule 14a-19 notice, was delivered approximately 154 days before the May 11, 2023 anniversary, which is well within the required timeframe from a timeliness standpoint.

However, Rule 14a-19 imposes specific content requirements for the notice beyond mere timeliness. Among other things, the notice must include: (a) a statement that the stockholder intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the registrant's nominees; and (b) the names of the stockholder's director nominees.

December 8 Notice Content. The Nomination Notice does not explicitly reference Rule 14a-19 and does not contain the required statement of intent to solicit holders of at least 67% of the voting power. While the notice does identify the two proposed nominees by name and states Pinnacle Harbor's intent to solicit proxies, the absence of the specific 67% solicitation representation means the Nomination Notice does not formally satisfy the content requirements of Rule 14a-19.

Assessment: The Nomination Notice does not formally comply with Rule 14a-19 requirements. This is a separate obligation imposed by the federal securities laws rather than by the Company's Bylaws, and the two requirements operate independently. Failure to comply with Rule 14a-19 does not necessarily invalidate the nomination notice under the Bylaws, but it does have significant practical consequences: if Pinnacle Harbor fails to provide a compliant Rule 14a-19 notice within the required timeframe, it would be precluded from using a universal proxy card to solicit proxies for its nominees, which could materially disadvantage its proxy solicitation effort. The Board should include a reminder of the Rule 14a-19 requirements in its response letter to Hargrove Sloane & Birch LLP, both as a matter of procedural completeness and to ensure that any subsequent proxy contest is conducted on a level playing field in compliance with applicable SEC rules.

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 are not strict bylaw deficiencies but are matters of significant practical importance that the Board should raise with Pinnacle Harbor and its counsel.

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 standard form questionnaire and standard form representation and agreement.

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 shall be construed as a waiver of any such rights or an acceptance of the December 8 Nomination Notice as timely or compliant.

The tone of the response letter should be professional and firm, but not unnecessarily adversarial. The letter should reflect the Company's commitment to the orderly administration of the advance-notice process and its good-faith willingness to permit cure, consistent with the Board's fiduciary obligations and the legitimate rights of the Company's stockholders. This approach preserves maximum optionality for the Board, including the ability to reject a non-compliant notice if cure is not achieved, while also maintaining a posture that would be viewed favorably by the Delaware Court of Chancery, by proxy advisory firms such as ISS and Tarrant Partners LLC, and by the Company's broader stockholder base.

A draft response letter is attached hereto as Appendix D. We recommend that the response letter be sent no later than December 16, 2022, in order to provide Pinnacle Harbor with adequate time to prepare and deliver a compliant supplemental notice before the close of the advance-notice window on January 11, 2023.

B. Board Preparedness

Even in the presence of the identified deficiencies, the Board should assume that Pinnacle Harbor will cure the deficiencies and deliver a compliant nomination notice within the advance-notice window. Pinnacle Harbor is represented by experienced activist counsel (Hargrove Sloane & Birch LLP), has retained a sophisticated proxy solicitation advisor (Garrison Proxy Advisors, LLC), and has publicly committed to the proxy contest. The deficiencies in the December 8 Nomination Notice appear to be the product of an overly aggressive filing timeline rather than a fundamental inability to comply. The Board should therefore proceed with its defensive preparations on the assumption that a contested election at the 2023 Annual Meeting is likely.

Specific preparatory steps include:

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 articulation of the Company's standalone strategic plan and the rationale for the Board's capital allocation decisions.

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' suitability for service on the Board and to the preparation of the Company's opposition proxy materials.

C. Review Timeline Going Forward

The following timeline describes the anticipated next steps in the advance-notice compliance review process:

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 current context. This analysis is scheduled for presentation to the Board and the Special Committee at the Board meeting currently scheduled for December 19, 2022.

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 contest.

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 provisions, and consent requirements.

Appendix B: Copy of the December 8, 2022 formal notice of intent to nominate directors from Hargrove Sloane & Birch LLP (Jonathan Birch III) to Patricia Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp., together with all attachments and enclosures thereto.

Appendix C: Advance-notice window calculation worksheet, detailing the calendar-day computation of the 150-day and 120-day deadlines referenced in Article II, Section 2.11 of the Bylaws.

Appendix D: Draft response letter from Patricia Nakamura, Corporate Secretary of Redstone Gaming Corp., to Jonathan Birch III at Hargrove Sloane & Birch LLP, identifying the timeliness issue and informational deficiencies in the December 8 Nomination Notice and requesting that Pinnacle Harbor deliver a compliant supplemental or amended notice within the advance-notice window (no later than January 11, 2023).

This memorandum is provided for the confidential use of the Board of Directors and the General Counsel of Redstone Gaming Corp. and is protected by the attorney-client privilege and the attorney work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. The analysis and recommendations contained herein are based on the facts known to us as of the date of this memorandum and on the governing law as currently in effect; they may require revision if additional facts come to light or if there are changes in applicable law or regulations.

We are available to discuss this memorandum and its recommendations at the Board's convenience. Please do not hesitate to contact Douglas Fairchild at (702) 555-4100 or Claire Dempsey at (702) 555-4127 with any questions.

Calderwood & Harkness LLP 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169 Additional office: 1200 Market Street, Suite 3100, Wilmington, DE 19801

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

No.	Deficiency	Bylaw / Legal Requirement	Cure Required?
1	Premature delivery — Nomination Notice received December 8, 2022, four calendar days before the advance-notice window opens on December 12, 2022	Article II, Section 2.11 (timeliness — "not earlier than" the 150th day)	Yes — refile or supplement within the window (no later than January 11, 2023)
2	Nominee residence addresses omitted — Residence addresses not provided for either Dr. Trevelyan or Mr. Grayson; only business addresses are disclosed	Article II, Section 2.11 (nominee biographical information — requires "residence address")	Yes — supplement with residence addresses for both nominees
3	Incomplete five-year directorship history — Only one prior directorship listed for Dr. Trevelyan; completeness of Mr. Grayson's history not confirmed	Article II, Section 2.11 (nominee biographical information — requires description of all directorships in past five years)	Yes — supplement with complete and verified five-year directorship histories for both nominees
4	Director questionnaires not completed or attached — Neither nominee's completed director questionnaire is included with the Nomination Notice	Article II, Section 2.11 (questionnaire requirement)	Yes — complete and submit signed questionnaires in the Company's standard form
5	Representation and agreement letters not signed or attached — No executed representation and agreement letters are included for either nominee	Article II, Section 2.11 (representation and agreement requirement)	Yes — provide signed originals of representation and agreement letters in the Company's standard form
6	Signed nominee consents not attached — General statement of consent in counsel's letter is insufficient; separate signed consents from each nominee required	Article II, Section 2.11 (written consent to be named and to serve)	Yes — provide individually signed written consents from each nominee
7	No gaming regulatory suitability representation — Nomination Notice does not address nominees' willingness or ability to submit to gaming license suitability investigations	Not an explicit bylaw requirement, but operationally material given the Company's status as a licensed gaming operator under NRS Chapter 463	Recommended — confirm each nominee's willingness to apply for, submit to suitability investigation for, and maintain required gaming licenses
8	No explicit Rule 14a-19 compliance statement — Nomination Notice does not reference SEC Rule 14a-19 or include the required statement of intent to solicit holders of at least 67% of voting power	SEC Rule 14a-19 (separate from bylaws; effective for meetings after August 31, 2022)	Recommended — provide a compliant Rule 14a-19 notice (deadline: approximately March 12, 2023)
Date	Event
September 12, 2021	Amended and Restated Bylaws of Redstone Gaming Corp. last amended
May 11, 2022	RGC 2022 Annual Meeting of Stockholders
October 28, 2022	Pinnacle Harbor sends private demand letter to Board Chair Diane K. Sheridan
November 10, 2022	Pinnacle Harbor files preliminary Schedule 13D with the SEC
November 14, 2022	RGC Board holds emergency meeting; forms Special Committee
November 15, 2022	Calderwood & Harkness LLP engagement opens
November 30, 2022	Pinnacle Harbor issues public "open letter" identifying nominees
December 5, 2022	Calderwood & Harkness delivers Bylaw and Charter Defensive Review Memorandum
December 8, 2022	Pinnacle Harbor formal Nomination Notice delivered (premature — four days before window opens)
December 12, 2022	Advance-notice window opens (150 days before May 11, 2023 anniversary)
December 14, 2022	Date of this memorandum
December 16, 2022	Target date for Company's response letter to Hargrove Sloane & Birch LLP
December 19, 2022	Scheduled Board meeting — stockholder rights plan analysis to be presented
January 11, 2023	Advance-notice window closes (120 days before May 11, 2023 anniversary)
March 12, 2023 (approx.)	Deadline for Rule 14a-19 notice (60 days before May 11, 2023 anniversary)

May 11, 2023	First anniversary of 2022 Annual Meeting
TBD (anticipated May 2023)	RGC 2023 Annual Meeting of Stockholders

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Board of Directors, Redstone Gaming Corp. Patricia "Trish" Nakamura, General Counsel & Corporate Secretary, Redstone Gaming Corp.
FROM: Douglas Fairchild, Engagement Partner, and Claire Dempsey, Lead Associate, Calderwood & Harkness LLP
DATE: December 14, 2022
RE: Advance-Notice Bylaw Compliance Analysis — Pinnacle Harbor Capital Partners, LP Formal Notice of Intent to Nominate Directors
Matter No.: 1033-00003
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 Redstone Gaming Corp. (the "Company" or "RGC"), as last amended on September 12, 2021 (the "Bylaws"). This memorandum is intended to provide the Board of Directors (the "Board") and the Company's General Counsel and Corporate Secretary with a detailed compliance assessment, a catalogue of identified deficiencies, and a recommended course of action with respect to the Nomination Notice.
Summary of Principal Conclusions. Our analysis yields the following principal conclusions:
First, with respect to timeliness, the advance-notice window under Section 2.11 of the Bylaws opens on December 12, 2022 — that is, the 150th day before the first anniversary of the 2022 Annual Meeting of Stockholders held on May 11, 2022 — and closes on January 11, 2023 — that is, the 120th day before such anniversary. The Nomination Notice was delivered on December 8, 2022, which is four calendar days before the window opened. Under the plain language of Section 2.11, which requires that notice be delivered "not earlier than the 150th day" before the anniversary date, the December 8 notice is premature and therefore technically outside the permissible nomination window. This creates a potential timeliness deficiency. As discussed in greater detail in Section III below, we analyze whether this premature delivery constitutes a curable defect or grounds for outright rejection, taking into account the text of the Bylaws, relevant Delaware case law, and practical strategic considerations.
Second, notwithstanding the timeliness issue, Pinnacle Harbor retains the ability to refile or supplement a compliant notice at any time until the close of the advance-notice window on January 11, 2023. Given the likelihood that Pinnacle Harbor will do so, the Board should plan its defensive preparations on the assumption that a substantively compliant nomination notice will ultimately be delivered.
Third, beyond the timeliness question, the Nomination Notice as delivered on December 8 contains several informational deficiencies with respect to the requirements of Section 2.11, including the omission of nominee residence addresses, an incomplete five-year directorship history for at least one nominee, the failure to attach completed director questionnaires and signed representation and agreement letters for either nominee, and the absence of signed consent letters. These deficiencies are catalogued in detail in Section V below.
Fourth, although not strictly a bylaw requirement, the Nomination Notice does not address gaming regulatory suitability or the nominees' willingness to submit to licensing review by the Nevada Gaming Control Board and other applicable regulatory authorities — a matter of significant operational importance for the Company. Additionally, the Nomination Notice does not contain an explicit compliance statement under SEC Rule 14a-19 (the universal proxy rule), which became effective for meetings held after August 31, 2022.
This memorandum concludes by providing the Board with a framework for evaluating whether to reject the Nomination Notice, demand cure and supplementation, or await a timely resubmission within the advance-notice window, together with a recommended response strategy designed to preserve the Board's rights under the Bylaws while minimizing unnecessary litigation risk.
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 equity fund focused on the consumer discretionary and gaming sectors, and it has a track record of activist engagements with mid-cap and large-cap public companies in the gaming, hospitality, and leisure industries.
Between June 2022 and November 2022, Pinnacle Harbor accumulated a stake of approximately 6.8% of the outstanding shares of RGC common stock, representing 7,119,600 shares out of 104,700,000 shares outstanding. Shares were acquired on the open market at a weighted-average purchase price of approximately $26.42 per share, reflecting a total cost basis of approximately $188.1 million. The accumulation was conducted in a manner designed to remain below the 5% reporting threshold under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for as long as possible, with Pinnacle Harbor crossing the 5% threshold in or around late September 2022 and filing its initial Schedule 13D on November 10, 2022, as described below.
On October 28, 2022, Pinnacle Harbor sent a private letter to Board Chair Diane K. Sheridan demanding three categories of action by the Company. First, Pinnacle Harbor demanded the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors. Second, Pinnacle Harbor demanded that the Board initiate a formal strategic review of the Company's interactive gaming division, which generated fiscal year 2021 revenue of approximately $412 million, representing approximately 14.4% of the Company's total revenue of $2.87 billion for that fiscal year. Pinnacle Harbor's letter characterized the interactive gaming division as "chronically undervalued within the conglomerate structure" and advocated for a potential sale, spin-off, or other separation transaction. Third, Pinnacle Harbor demanded the return of $300 million to stockholders through either a special dividend or an accelerated share repurchase program, characterizing the Company's capital allocation strategy as "overly conservative" in light of its balance sheet capacity and free cash flow generation.
On November 10, 2022, Pinnacle Harbor filed a preliminary Schedule 13D with the Securities and Exchange Commission (the "SEC") disclosing its 6.8% stake in RGC common stock and its activist intent, including the substance of the demands communicated in the October 28 private letter. The Schedule 13D filing attracted immediate market attention and media coverage, with several sell-side analysts publishing commentary on the potential merits and risks of the Pinnacle Harbor campaign.
On November 14, 2022, the RGC Board held a special emergency meeting to discuss the Pinnacle Harbor activist campaign and the Company's response strategy. At that meeting, the Board resolved to form a Special Committee of independent directors to oversee the Company's response, consisting of Jim Delacroix (Chair of the Special Committee), Carmen Vasquez, and Randall Morse. The Board further resolved to engage outside counsel and other professional advisors to assist with the Company's defense.
Calderwood & Harkness LLP was formally engaged by the Company on November 15, 2022, to serve as special outside counsel to the Board and the Special Committee in connection with the Pinnacle Harbor activist campaign. The scope of the engagement encompasses, among other things, bylaw and charter analysis, advance-notice compliance review, proxy contest preparation, and related corporate governance advisory services.
On November 30, 2022, Pinnacle Harbor escalated its campaign by issuing a public "open letter" to the Board and stockholders of RGC. The open letter reiterated Pinnacle Harbor's prior demands and, for the first time, publicly identified its two proposed Board nominees: Dr. Sandra Trevelyan and Hugh Desmond Grayson. The open letter stated that if the Company did not voluntarily appoint these nominees to the Board, Pinnacle Harbor would nominate them for election at the Company's 2023 Annual Meeting of Stockholders and conduct a proxy solicitation in support of their election. The open letter was filed with the SEC as additional soliciting material and was disseminated to the financial media.
On December 5, 2022, Calderwood & Harkness delivered to the Board and Special Committee its comprehensive Bylaw and Charter Defensive Review Memorandum, which analyzed the Company's existing governance documents, identified the advance-notice provisions and other structural defenses available to the Board, and recommended certain preparatory actions. This current memorandum builds upon and supplements the analysis presented in the December 5 memorandum.
B. The December 8 Formal Notice
On December 8, 2022, Jonathan "Jon" Birch III, lead partner at Hargrove Sloane & Birch LLP, located at 1585 Broadway, 40th Floor, New York, New York 10036, transmitted a formal written notice of intent to nominate directors (the "Nomination Notice") to Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp., at the Company's principal executive offices located at 8700 Las Vegas Boulevard South, Suite 2200, Las Vegas, Nevada 89123. The Nomination Notice was transmitted on behalf of Pinnacle Harbor Capital Partners, LP as the nominating stockholder.
The Nomination Notice purports to comply with the requirements of Article II, Section 2.11 of the Amended and Restated Bylaws of the Company and identifies two individuals as nominees for election to the Board of Directors at the 2023 Annual Meeting of Stockholders: (1) Dr. Sandra Trevelyan, age 55, former Chief Operating Officer of Meridian Interactive Holdings, Inc.; and (2) Hugh Desmond Grayson, age 61, former Chief Financial Officer of Atlas Leisure Group, Inc.
The Nomination Notice was delivered via overnight courier (Severin Partners LLC Priority Overnight) and concurrently transmitted via email to Ms. Nakamura's corporate email address. The physical copy was received and logged by the Company's corporate offices on December 8, 2022, and forwarded to Ms. Nakamura and to Calderwood & Harkness the same day. A copy of the Nomination Notice is attached hereto as Appendix B.
C. The Pinnacle Harbor Board Nominees
The Nomination Notice identifies the following two individuals as nominees for election to the RGC Board of Directors:
Dr. Sandra Trevelyan (Nominee #1), age 55, is the former Chief Operating Officer of Meridian Interactive Holdings, Inc., a Nevada corporation engaged in the development and operation of interactive gaming platforms. Dr. Trevelyan served as COO of Meridian Interactive from 2014 to 2020. She currently operates as an independent gaming industry consultant, advising companies in the interactive and digital gaming sectors. According to the Nomination Notice, Dr. Trevelyan holds a Ph.D. in applied mathematics from the Massachusetts Institute of Technology and an M.B.A. from the Wharton School of the University of Pennsylvania. The Nomination Notice describes Dr. Trevelyan as having "deep expertise in interactive gaming, digital transformation, and operational efficiency," which Pinnacle Harbor asserts would complement the Board's existing skill set.
Hugh Desmond Grayson (Nominee #2), age 61, is the former Chief Financial Officer of Atlas Leisure Group, Inc., a Delaware corporation that operated hospitality and entertainment assets across the western United States until its acquisition by a private equity consortium in 2019. Mr. Grayson served as CFO of Atlas Leisure from 2013 to 2019 and, according to the Nomination Notice, played a central role in the sale process. He currently serves as a director of two private hospitality companies, which the Nomination Notice identifies by name. The Nomination Notice describes Mr. Grayson as having "extensive experience in capital allocation, M&A transaction execution, and corporate governance in the hospitality and gaming industries."
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.
For purposes of Section 2.11, the term "timely" is defined as follows: to be timely, a stockholder's notice must be delivered to the Corporate Secretary "not earlier than the 150th day and not later than the 120th day before the first anniversary of the date of the preceding year's annual meeting of stockholders." The Bylaws further provide that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary of the prior year's annual meeting, different notice deadlines apply; however, because the Company has not announced any change to the anticipated date of the 2023 Annual Meeting, the standard window calculation applies here.
B. Calculation. The calculation of the advance-notice window for nominations at the 2023 Annual Meeting of Stockholders is as follows:
Step 1: Identify the date of the preceding year's annual meeting. The 2022 Annual Meeting of Stockholders of Redstone Gaming Corp. was held on May 11, 2022. This date is established by the Company's Current Report on Form 8-K filed with the SEC on May 12, 2022, and the definitive proxy statement filed on Schedule 14A on March 29, 2022.
Step 2: Determine the first anniversary of the 2022 Annual Meeting. The first anniversary of the May 11, 2022 annual meeting is May 11, 2023.
Step 3: Calculate the opening of the advance-notice window (150 days before May 11, 2023). Counting backward 150 calendar days from May 11, 2023 yields December 12, 2022. Accordingly, the advance-notice window opens on December 12, 2022, and the earliest date on which a compliant nomination notice may be delivered is December 12, 2022.
Step 4: Calculate the closing of the advance-notice window (120 days before May 11, 2023). Counting backward 120 calendar days from May 11, 2023 yields January 11, 2023. Accordingly, the advance-notice window closes on January 11, 2023, and the latest date on which a compliant nomination notice may be delivered is January 11, 2023.
The permissible nomination window under Section 2.11 of the Bylaws is December 12, 2022 through January 11, 2023, inclusive. A detailed calculation worksheet is attached hereto as Appendix C.
C. Timeliness of the December 8, 2022 Notice
Pinnacle Harbor's Nomination Notice was delivered to the Company's Corporate Secretary on December 8, 2022, as confirmed by the Severin Partners LLC delivery receipt and email timestamp. The advance-notice window under Section 2.11 does not open until December 12, 2022. Accordingly, the December 8 Nomination Notice was delivered four calendar days before the advance-notice window opened and is therefore premature under the plain language of Section 2.11.
The question presented is whether a premature nomination notice — one delivered before the "not earlier than" date specified in the bylaw — is defective and subject to rejection, or whether it may be deemed timely or treated as a curable irregularity. We analyze this question below.
Strict textual analysis. Section 2.11 of the Bylaws provides that a stockholder's notice must be delivered "not earlier than" the 150th day before the anniversary of the prior year's annual meeting. The phrase "not earlier than" establishes a clear temporal boundary: a notice delivered before that date is, by definition, outside the permissible window and therefore not "timely" as defined by the Bylaws. Under a strict reading of the provision, the December 8 Nomination Notice is untimely, and the Board would be within its rights to reject the notice as non-compliant.
Delaware case law considerations. Delaware courts have generally upheld advance-notice bylaws as drafted and have recognized the legitimate corporate purpose served by such provisions, including orderly management of the proxy process, adequate time for the board and stockholders to evaluate nominees, and prevention of ambush nominations. See, e.g., Openwave Sys. Inc. v. Harbinger Capital Partners Master Fund I, Ltd., 924 A.2d 228 (Del. Ch. 2007); AB Value Partners, LP v. Kreisler Mfg. Corp., 2014 WL 7150465 (Del. Ch. Dec. 16, 2014). Courts have generally enforced "not earlier than" and "not later than" deadlines as written.
At the same time, the Delaware Court of Chancery has on occasion considered whether strict enforcement of advance-notice provisions under the particular circumstances would be inequitable, particularly where the substance of the notice was adequate, the board suffered no prejudice from the timing irregularity, and the board's enforcement of the provision appeared to be motivated primarily by a desire to entrench incumbent directors. See Hubbard v. Hollywood Park Realty Enters., Inc., 1991 WL 3151 (Del. Ch. Jan. 14, 1991) (analyzing advance-notice requirements in the context of the board's fiduciary duties). However, the mere fact that a notice was delivered early — rather than late — may weigh against a finding of inequity, because the board's interest in orderly procedure is arguably less compromised by early notice (which gives the board more time to evaluate nominees) than by late notice.
There is limited Delaware authority directly addressing the enforceability of a "not earlier than" deadline as applied to a nomination notice that is otherwise substantively complete. We are not aware of any Delaware decision holding that a board is required to accept a premature nomination notice or that rejection of a premature notice constitutes a breach of fiduciary duty, provided the bylaw itself is valid and was not adopted for an inequitable purpose. However, there is also no authority conclusively establishing that a board must reject a premature notice.
Practical and strategic considerations. Several practical and strategic factors counsel against outright rejection of the December 8 Nomination Notice on timeliness grounds alone at this time:
First, Pinnacle Harbor has until January 11, 2023, to refile or supplement a compliant nomination notice within the advance-notice window. If the Board rejects the December 8 notice on timeliness grounds, Pinnacle Harbor will almost certainly simply refile the same notice (corrected for informational deficiencies) on or after December 12, 2022. Rejection would therefore accomplish little other than a brief procedural delay.
Second, outright rejection of the December 8 notice could be perceived — by a court, by ISS and Tarrant Partners LLC, and by the Company's stockholders — as a defensive tactic designed to impede a legitimate stockholder nomination rather than as a good-faith enforcement of procedural requirements. This perception could adversely affect the Board's credibility in a subsequent proxy contest and could invite a challenge in the Delaware Court of Chancery.
Third, the Board's credibility and optionality are better preserved by a measured response that identifies the timeliness issue and informational deficiencies, requests cure, and reserves all rights, rather than by an adversarial rejection that could precipitate litigation before the nomination process has even been finalized.
Fourth, the Company remains in the early stages of its engagement with Pinnacle Harbor, and there may be opportunities for constructive dialogue, including potential settlement discussions involving Board composition. An unduly aggressive posture at this stage could foreclose such opportunities.
Recommendation on timeliness. For the foregoing reasons, we recommend that the Board not affirmatively reject the December 8 Nomination Notice on timeliness grounds alone at this time. Instead, we recommend that the Corporate Secretary send a response letter to Hargrove Sloane & Birch LLP identifying the timeliness issue (delivery four days before the advance-notice window opened on December 12, 2022), identifying the informational deficiencies catalogued in Section V below, and requesting that Pinnacle Harbor deliver a compliant supplemental or amended notice within the advance-notice window (no later than January 11, 2023). The response letter should expressly state that the Company reserves all rights under the Bylaws with respect to any failure to comply with Section 2.11, without waiver. A draft response letter is attached hereto as Appendix D.
This approach preserves the Board's rights under the Bylaws — including the right to reject a non-compliant notice if Pinnacle Harbor fails to cure — while avoiding unnecessary litigation risk and maintaining a posture of procedural good faith.
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 on nominees, and (iii) ensuring compliance with applicable SEC disclosure rules and Nasdaq listing standards.
The required disclosures fall into several broad categories: (1) information about the nominating stockholder and its associated persons (including ownership, derivative positions, hedging arrangements, voting agreements, and intent to solicit proxies); (2) information about each proposed nominee (including biographical and background information, beneficial ownership, and five-year directorship history); (3) procedural requirements (including completion of the Company's standard director questionnaire, execution of a written representation and agreement, and written consent to be named and to serve); and (4) such other information as would be required to be disclosed in a proxy statement or other filing pursuant to Regulation 14A under the Exchange Act.
We analyze each category below with reference to the content of the December 8 Nomination Notice.
B. Stockholder / Beneficial Owner Information
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, controlled by, or under common control with the nominating stockholder, and any member of the immediate family of the foregoing sharing the same household).
December 8 Notice Content. The Nomination Notice identifies Pinnacle Harbor Capital Partners, LP as the nominating stockholder and provides its business address as 590 Madison Avenue, 34th Floor, New York, New York 10022. The notice further identifies Pinnacle Harbor Capital Management, LLC as the general partner of Pinnacle Harbor Capital Partners, LP, and identifies Viktor S. Kessler (Managing Partner and Chief Investment Officer) and Nadia Johar (Head of Activism and Portfolio Manager) as the principals of the general partner with authority over investment and voting decisions with respect to the shares held by Pinnacle Harbor. The notice discloses beneficial ownership of 7,119,600 shares of RGC common stock, representing approximately 6.8% of the 104,700,000 shares of common stock outstanding.
Assessment: Appears substantially compliant. The identity, address, and ownership disclosures in the Nomination Notice are consistent with the requirements of Section 2.11 and are generally consistent with the information disclosed in Pinnacle Harbor's Schedule 13D filing dated November 10, 2022. We recommend cross-referencing the share ownership figure disclosed in the Nomination Notice (7,119,600 shares) against the most recent Schedule 13D or Schedule 13D/A to confirm consistency and to determine whether Pinnacle Harbor has acquired additional shares since the November 10 filing. If there is a discrepancy, the Board should request an updated ownership disclosure.
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 beneficial owner on whose behalf the nomination is being made, or any associated person of the foregoing. This requirement is designed to ensure that the Board and stockholders have a complete picture of the nominating stockholder's economic interest in the Company, including any positions that decouple economic ownership from voting power.
December 8 Notice Content. The Nomination Notice includes a representation that Pinnacle Harbor, its general partner, and its principals do not hold any derivative positions, hedging arrangements, or short interests with respect to the Company's securities, and that the shares disclosed are held on a long-only basis.
Assessment: Facially compliant. The representation of "none" with respect to derivative and hedging positions satisfies the formal requirements of Section 2.11 on its face. However, we recommend that the Company verify this representation against the derivative position disclosures in Pinnacle Harbor's Schedule 13D filing and any subsequent amendments. If any discrepancy is identified, the Board should request clarification and supplementation. We also note that the representation in the Nomination Notice is as of an unspecified date; it would be advisable to request that any supplemental notice confirm derivative and hedging positions as of a date proximate to the supplemental filing.
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 arrangement with respect to any matter to be acted upon at the annual meeting.
December 8 Notice Content. The Nomination Notice references the engagement of Garrison Proxy Advisors, LLC, with Alicia Trent serving as Managing Director, as Pinnacle Harbor's proxy solicitation advisor in connection with the anticipated proxy contest. The Nomination Notice does not disclose any voting agreements, voting commitments, or arrangements with any other stockholder of the Company relating to the nomination or the voting of shares. The notice also does not disclose the formation of a "group" with any other stockholder for purposes of Section 13(d) of the Exchange Act.
Assessment: Appears compliant. The disclosure of the Garrison Proxy Advisors engagement is responsive to the requirement, and the absence of any disclosed voting agreements is consistent with what we would expect at this relatively early stage of the activist campaign. However, we recommend that the Company monitor for any group formation issues under Section 13(d) of the Exchange Act, including any amended Schedule 13D filings by Pinnacle Harbor that disclose the formation of a group or any agreements with other stockholders. If evidence of undisclosed voting agreements or group activity comes to light, the Board should promptly raise the issue and request supplementation.
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 elect the nominee(s) and/or otherwise to solicit proxies or votes from stockholders in support of the nomination(s).
December 8 Notice Content. The Nomination Notice includes a clear statement that Pinnacle Harbor intends to solicit proxies from the Company's stockholders in support of the election of Dr. Trevelyan and Mr. Grayson at the 2023 Annual Meeting of Stockholders if the Company does not voluntarily appoint them to the Board prior to such meeting.
Assessment: Compliant. The proxy solicitation intent representation satisfies the requirements of Section 2.11 on its face.
C. Nominee Information
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 held by the nominee during the preceding five years; and (d) such other information regarding the nominee as would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies for the election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.
December 8 Notice Content. The Nomination Notice provides biographical summaries for both nominees.
With respect to Dr. Sandra Trevelyan, the Nomination Notice provides her name, age (55), and business address. It describes her former position as Chief Operating Officer of Meridian Interactive Holdings, Inc. (a Nevada corporation) from 2014 to 2020 and her current role as an independent gaming consultant. The notice lists one prior directorship held within the past five years — specifically, a board seat at an unspecified interactive gaming industry association. The notice provides Dr. Trevelyan's educational background and a narrative description of her qualifications.
With respect to Hugh Desmond Grayson, the Nomination Notice provides his name, age (61), and business address. It describes his former position as Chief Financial Officer of Atlas Leisure Group, Inc. (a Delaware corporation) from 2013 to 2019 and his current service as a director of two private hospitality companies, which are identified by name in the notice. The notice provides a narrative description of Mr. Grayson's qualifications and experience.
Assessment: Partially deficient. Two deficiencies are identified:
First, residence addresses are not provided for either nominee. Section 2.11 explicitly requires disclosure of the "residence address" of each nominee, in addition to the nominee's business address. The Nomination Notice provides business addresses for both Dr. Trevelyan and Mr. Grayson but omits their residence addresses. This is a clear informational deficiency that must be cured.
Second, the five-year directorship history for Dr. Trevelyan may be incomplete. The Nomination Notice lists only one prior directorship for Dr. Trevelyan during the preceding five years. However, given Dr. Trevelyan's current role as an independent gaming consultant and the breadth of her industry experience, it is plausible that she holds or has held additional board or advisory positions that should have been disclosed. The Board should request a complete and verified five-year directorship history for Dr. Trevelyan. Additionally, although Mr. Grayson's two current private-company directorships are identified, his full five-year history should be confirmed as complete.
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 ownership satisfies the requirement on its face.
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 become a party to any agreement, arrangement, or understanding with, and has not given any commitment or assurance to, any person or entity as to how the nominee, if elected as a director of the Company, will act or vote on any issue or question, except as disclosed in the representation and agreement;
(b) A representation that the nominee is not and will not become a party to any agreement, arrangement, or understanding with any person or entity, other than the Company, with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director of the Company, except as disclosed in the representation and agreement;
(c) A commitment that the nominee will comply with all applicable corporate governance, confidentiality, stock ownership, and trading policies and guidelines of the Company, including any policies adopted after the nominee's election, and that the nominee will promptly provide any information reasonably requested by the Company for inclusion in the Company's public filings; and
(d) A commitment that the nominee will comply with all applicable rules and listing standards of the Nasdaq Stock Market regarding director independence and financial literacy, and will submit such information as may be necessary to permit the Company to determine the nominee's qualification as an "independent director" under applicable Nasdaq rules.
December 8 Notice Content. The Nomination Notice includes a general statement that both Dr. Trevelyan and Mr. Grayson "are willing to complete the Company's standard director questionnaire upon receipt and to execute such representation and agreement letters as the Company may reasonably require." However, the Nomination Notice does not attach completed director questionnaires for either nominee, nor does it attach signed representation and agreement letters.
Assessment: Deficient. The failure to include completed questionnaires and executed representation and agreement letters is a material omission. Section 2.11 provides that the nominating stockholder's notice must include — as part of the notice itself — the completed questionnaire and signed representation and agreement for each nominee. A general statement of willingness to complete these documents in the future does not satisfy the bylaw requirement, which calls for the documents to accompany the notice. The Board should require that completed and signed questionnaires and representation and agreement letters be provided as a condition to accepting the Nomination Notice. To facilitate cure, the Corporate Secretary should promptly transmit the Company's standard form questionnaire and representation and agreement to Hargrove Sloane & Birch LLP with the response letter.
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 jurisdictions where the Company operates. Under the Nevada Gaming Control Act (NRS Chapter 463) and the regulations promulgated thereunder, persons who serve as directors, officers, or key employees of a gaming licensee may be required to undergo suitability investigations and obtain individual gaming licenses or findings of suitability from the NGCB and, in some cases, from gaming regulatory authorities in other jurisdictions. The failure of a director to obtain or maintain a required gaming license could result in adverse regulatory consequences for the Company, including disciplinary action, conditions on the Company's gaming licenses, or, in extreme cases, suspension or revocation of the Company's gaming licenses.
December 8 Notice Content. The Nomination Notice does not contain any reference to gaming regulatory suitability, licensability, or willingness of either nominee to submit to suitability investigations by the NGCB or other gaming regulatory authorities.
Assessment: The Nomination Notice does not address gaming regulatory considerations. While the absence of a gaming regulatory suitability representation may not constitute a strict bylaw deficiency, it is a matter of significant practical and operational concern for the Company. The Board should raise this issue in its response to Pinnacle Harbor and request that both nominees confirm their willingness and ability to apply for, submit to suitability investigations for, and maintain any and all gaming licenses, findings of suitability, or other regulatory approvals required in connection with service as a director of the Company. Non-licensability — whether due to background issues, unwillingness to submit to investigation, or inability to satisfy regulatory requirements — could effectively disqualify a nominee from service on the Board, regardless of whether the nominee is elected by stockholders.
D. Additional Requirements
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. Trevelyan and Mr. Grayson consent to being named as nominees in any proxy statement filed in connection with the 2023 Annual Meeting and agree to serve as directors of the Company if duly elected." However, no separate signed consent letters from the nominees themselves are attached to the Nomination Notice.
Assessment: Potentially deficient. While the general statement of consent in counsel's letter may be viewed as a good-faith effort to comply, best practice — and a reasonable reading of Section 2.11 — calls for separate, individually signed written consents from each nominee, rather than a blanket statement attributed to the nominees by their counsel. The Board should request that signed consent letters from each nominee be provided as part of the supplemental notice.
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 nominees. This notice must be provided no later than 60 calendar days prior to the anniversary of the previous year's annual meeting. For the 2023 Annual Meeting (with the 2022 Annual Meeting having been held on May 11, 2022), the Rule 14a-19 notice deadline is 60 days before May 11, 2023, or approximately March 12, 2023. The December 8 Nomination Notice, if viewed as a Rule 14a-19 notice, was delivered approximately 154 days before the May 11, 2023 anniversary, which is well within the required timeframe from a timeliness standpoint.
However, Rule 14a-19 imposes specific content requirements for the notice beyond mere timeliness. Among other things, the notice must include: (a) a statement that the stockholder intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the registrant's nominees; and (b) the names of the stockholder's director nominees.
December 8 Notice Content. The Nomination Notice does not explicitly reference Rule 14a-19 and does not contain the required statement of intent to solicit holders of at least 67% of the voting power. While the notice does identify the two proposed nominees by name and states Pinnacle Harbor's intent to solicit proxies, the absence of the specific 67% solicitation representation means the Nomination Notice does not formally satisfy the content requirements of Rule 14a-19.
Assessment: The Nomination Notice does not formally comply with Rule 14a-19 requirements. This is a separate obligation imposed by the federal securities laws rather than by the Company's Bylaws, and the two requirements operate independently. Failure to comply with Rule 14a-19 does not necessarily invalidate the nomination notice under the Bylaws, but it does have significant practical consequences: if Pinnacle Harbor fails to provide a compliant Rule 14a-19 notice within the required timeframe, it would be precluded from using a universal proxy card to solicit proxies for its nominees, which could materially disadvantage its proxy solicitation effort. The Board should include a reminder of the Rule 14a-19 requirements in its response letter to Hargrove Sloane & Birch LLP, both as a matter of procedural completeness and to ensure that any subsequent proxy contest is conducted on a level playing field in compliance with applicable SEC rules.
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 are not strict bylaw deficiencies but are matters of significant practical importance that the Board should raise with Pinnacle Harbor and its counsel.
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 standard form questionnaire and standard form representation and agreement.
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 shall be construed as a waiver of any such rights or an acceptance of the December 8 Nomination Notice as timely or compliant.
The tone of the response letter should be professional and firm, but not unnecessarily adversarial. The letter should reflect the Company's commitment to the orderly administration of the advance-notice process and its good-faith willingness to permit cure, consistent with the Board's fiduciary obligations and the legitimate rights of the Company's stockholders. This approach preserves maximum optionality for the Board, including the ability to reject a non-compliant notice if cure is not achieved, while also maintaining a posture that would be viewed favorably by the Delaware Court of Chancery, by proxy advisory firms such as ISS and Tarrant Partners LLC, and by the Company's broader stockholder base.
A draft response letter is attached hereto as Appendix D. We recommend that the response letter be sent no later than December 16, 2022, in order to provide Pinnacle Harbor with adequate time to prepare and deliver a compliant supplemental notice before the close of the advance-notice window on January 11, 2023.
B. Board Preparedness
Even in the presence of the identified deficiencies, the Board should assume that Pinnacle Harbor will cure the deficiencies and deliver a compliant nomination notice within the advance-notice window. Pinnacle Harbor is represented by experienced activist counsel (Hargrove Sloane & Birch LLP), has retained a sophisticated proxy solicitation advisor (Garrison Proxy Advisors, LLC), and has publicly committed to the proxy contest. The deficiencies in the December 8 Nomination Notice appear to be the product of an overly aggressive filing timeline rather than a fundamental inability to comply. The Board should therefore proceed with its defensive preparations on the assumption that a contested election at the 2023 Annual Meeting is likely.
Specific preparatory steps include:
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 articulation of the Company's standalone strategic plan and the rationale for the Board's capital allocation decisions.
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' suitability for service on the Board and to the preparation of the Company's opposition proxy materials.
C. Review Timeline Going Forward
The following timeline describes the anticipated next steps in the advance-notice compliance review process:
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 current context. This analysis is scheduled for presentation to the Board and the Special Committee at the Board meeting currently scheduled for December 19, 2022.
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 contest.
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 provisions, and consent requirements.
Appendix B: Copy of the December 8, 2022 formal notice of intent to nominate directors from Hargrove Sloane & Birch LLP (Jonathan Birch III) to Patricia Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp., together with all attachments and enclosures thereto.
Appendix C: Advance-notice window calculation worksheet, detailing the calendar-day computation of the 150-day and 120-day deadlines referenced in Article II, Section 2.11 of the Bylaws.
Appendix D: Draft response letter from Patricia Nakamura, Corporate Secretary of Redstone Gaming Corp., to Jonathan Birch III at Hargrove Sloane & Birch LLP, identifying the timeliness issue and informational deficiencies in the December 8 Nomination Notice and requesting that Pinnacle Harbor deliver a compliant supplemental or amended notice within the advance-notice window (no later than January 11, 2023).
This memorandum is provided for the confidential use of the Board of Directors and the General Counsel of Redstone Gaming Corp. and is protected by the attorney-client privilege and the attorney work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. The analysis and recommendations contained herein are based on the facts known to us as of the date of this memorandum and on the governing law as currently in effect; they may require revision if additional facts come to light or if there are changes in applicable law or regulations.
We are available to discuss this memorandum and its recommendations at the Board's convenience. Please do not hesitate to contact Douglas Fairchild at (702) 555-4100 or Claire Dempsey at (702) 555-4127 with any questions.
Calderwood & Harkness LLP 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169 Additional office: 1200 Market Street, Suite 3100, Wilmington, DE 19801
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
No. | Deficiency | Bylaw / Legal Requirement | Cure Required?
1 | Premature delivery — Nomination Notice received December 8, 2022, four calendar days before the advance-notice window opens on December 12, 2022 | Article II, Section 2.11 (timeliness — "not earlier than" the 150th day) | Yes — refile or supplement within the window (no later than January 11, 2023)
2 | Nominee residence addresses omitted — Residence addresses not provided for either Dr. Trevelyan or Mr. Grayson; only business addresses are disclosed | Article II, Section 2.11 (nominee biographical information — requires "residence address") | Yes — supplement with residence addresses for both nominees
3 | Incomplete five-year directorship history — Only one prior directorship listed for Dr. Trevelyan; completeness of Mr. Grayson's history not confirmed | Article II, Section 2.11 (nominee biographical information — requires description of all directorships in past five years) | Yes — supplement with complete and verified five-year directorship histories for both nominees
4 | Director questionnaires not completed or attached — Neither nominee's completed director questionnaire is included with the Nomination Notice | Article II, Section 2.11 (questionnaire requirement) | Yes — complete and submit signed questionnaires in the Company's standard form
5 | Representation and agreement letters not signed or attached — No executed representation and agreement letters are included for either nominee | Article II, Section 2.11 (representation and agreement requirement) | Yes — provide signed originals of representation and agreement letters in the Company's standard form
6 | Signed nominee consents not attached — General statement of consent in counsel's letter is insufficient; separate signed consents from each nominee required | Article II, Section 2.11 (written consent to be named and to serve) | Yes — provide individually signed written consents from each nominee
7 | No gaming regulatory suitability representation — Nomination Notice does not address nominees' willingness or ability to submit to gaming license suitability investigations | Not an explicit bylaw requirement, but operationally material given the Company's status as a licensed gaming operator under NRS Chapter 463 | Recommended — confirm each nominee's willingness to apply for, submit to suitability investigation for, and maintain required gaming licenses
8 | No explicit Rule 14a-19 compliance statement — Nomination Notice does not reference SEC Rule 14a-19 or include the required statement of intent to solicit holders of at least 67% of voting power | SEC Rule 14a-19 (separate from bylaws; effective for meetings after August 31, 2022) | Recommended — provide a compliant Rule 14a-19 notice (deadline: approximately March 12, 2023)
Date | Event
September 12, 2021 | Amended and Restated Bylaws of Redstone Gaming Corp. last amended
May 11, 2022 | RGC 2022 Annual Meeting of Stockholders
October 28, 2022 | Pinnacle Harbor sends private demand letter to Board Chair Diane K. Sheridan
November 10, 2022 | Pinnacle Harbor files preliminary Schedule 13D with the SEC
November 14, 2022 | RGC Board holds emergency meeting; forms Special Committee
November 15, 2022 | Calderwood & Harkness LLP engagement opens
November 30, 2022 | Pinnacle Harbor issues public "open letter" identifying nominees
December 5, 2022 | Calderwood & Harkness delivers Bylaw and Charter Defensive Review Memorandum
December 8, 2022 | Pinnacle Harbor formal Nomination Notice delivered (premature — four days before window opens)
December 12, 2022 | Advance-notice window opens (150 days before May 11, 2023 anniversary)
December 14, 2022 | Date of this memorandum
December 16, 2022 | Target date for Company's response letter to Hargrove Sloane & Birch LLP
December 19, 2022 | Scheduled Board meeting — stockholder rights plan analysis to be presented
January 11, 2023 | Advance-notice window closes (120 days before May 11, 2023 anniversary)
March 12, 2023 (approx.) | Deadline for Rule 14a-19 notice (60 days before May 11, 2023 anniversary)
May 11, 2023 | First anniversary of 2022 Annual Meeting
TBD (anticipated May 2023) | RGC 2023 Annual Meeting of Stockholders

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