1033-00003 · Redstone Gaming Corp · Memos & Analyses

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Special Committee of the Board of Directors of Redstone Gaming Corp.

James "Jim" Delacroix (Chair) Carmen Vasquez Randall Morse

CC: Diane K. Sheridan (Board Chair); Patricia "Trish" Nakamura (General Counsel & Corporate Secretary); Gerald R. Whitmore (CEO); Raymond Choi (CFO)

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

DATE: December 20, 2022

RE: Shareholder Outreach and Engagement Strategy — Defense Against Pinnacle Harbor Capital Partners, LP Activist Campaign

Matter No.: 1033-00003

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I. Executive Summary

The purpose of this memorandum is to provide the Special Committee of the Board of Directors of Redstone Gaming Corp. ("RGC" or the "Company") with a comprehensive shareholder engagement strategy designed to secure broad institutional support for the RGC management slate and to counter the activist campaign launched by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"). This memorandum reflects our assessment of the current landscape, the composition of the Company's shareholder base, the coordination framework among the Company's advisors, and the recommended phases of engagement, messaging, and contingency planning necessary to position RGC favorably in any contested or uncontested shareholder vote.

The activist situation arose when Pinnacle Harbor disclosed a 6.8% beneficial ownership stake in RGC, representing 7,119,600 shares of common stock out of 104,700,000 shares outstanding, via a preliminary Schedule 13D filed with the Securities and Exchange Commission on November 10, 2022. On November 30, 2022, Pinnacle Harbor issued a public open letter to the Board and shareholders of RGC, in which it articulated three principal demands: (1) the immediate appointment of two Pinnacle Harbor nominees — Dr. Sandra Trevelyan and Hugh Desmond Grayson — to the Board of Directors; (2) a formal strategic review of the Company's interactive gaming division, including consideration of a potential sale or spin-off of the division; and (3) the return of $300 million in capital to shareholders through either a special dividend or an accelerated share repurchase program.

Pinnacle Harbor's outside counsel, Hargrove Sloane & Birch LLP, acting through partner Jonathan Birch III, sent formal notice of intent to nominate directors at the Company's 2023 annual meeting of stockholders on December 8, 2022, pursuant to Article II, Section 2.11 of the RGC Amended and Restated Bylaws (the "Advance Notice Provision"). The advance-notice window for director nominations opened on December 12, 2022 — 150 days before the anniversary of the Company's May 11, 2022 annual meeting of stockholders — and closes on January 11, 2023 — 120 days before the anniversary of the 2022 annual meeting. Accordingly, any compliant nomination notice from Pinnacle Harbor must be received by the Corporate Secretary on or before January 11, 2023.

This memorandum outlines a coordinated outreach effort involving Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H"), the Company's proxy solicitor Whitfield Morrow Partners, LLC ("Whitfield Morrow"), through Senior Vice President Denise Cavanaugh, the Company's investor relations advisor Harlan Ridge Communications, LLC ("Harlan Ridge"), through Partner Philip Navarette, and the Company's financial advisor Calloway Pinnacle Trust Bank ("Calloway Wainwright"), through Managing Director Thomas V. Ashford, in his capacity as head of the firm's Activism & Corporate Defense practice. The strategy also contemplates coordination with the Company's transfer agent, Continental Share Services, Inc., and with senior Company management and independent directors who will serve as principal spokespersons in shareholder meetings.

Based on our analysis, we recommend that the Company begin proactive institutional outreach no later than the first full week of January 2023, well ahead of a potential proxy contest at the 2023 annual meeting of stockholders, which is anticipated to be held in May 2023. Early engagement with key institutional holders — in particular Ridgeway Asset Management, LP (8.2%), Stillwater Capital Advisors, LLC (5.4%), and Canfield Municipal Employees' Retirement System (2.1%) — is essential to establishing a foundation of support that can withstand Pinnacle Harbor's solicitation efforts and any adverse proxy advisory firm recommendations. The Special Committee should authorize the immediate commencement of Phase 1 preparatory activities as described in this memorandum and approve the proposed outreach timeline through Phase 4.

II. Overview of the Activist Situation

A. Pinnacle Harbor Capital Partners, LP — Profile and Demands

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's principal office is located at 590 Madison Avenue, 34th Floor, New York, New York 10022. Pinnacle Harbor was founded in 2014 and currently manages assets under management of approximately $4.2 billion. The fund pursues an event-driven and activist equity strategy with a particular focus on mid-cap companies in the gaming, hospitality, and consumer-discretionary sectors. Pinnacle Harbor has a well-documented track record of agitating for board representation, operational changes, and capital returns at target companies, having conducted public activist campaigns at approximately eight portfolio companies since 2017.

The fund's Managing Partner and Chief Investment Officer is Viktor S. Kessler (age 47), who co-founded the firm and maintains primary decision-making authority over portfolio allocation and activist strategy. The Head of Activism and Portfolio Manager responsible for the RGC position is Nadia Johar (age 39), a former sell-side analyst who joined Pinnacle Harbor in 2016 and has led several of the fund's most prominent campaigns. Based on our prior interactions with Pinnacle Harbor in other activist situations, we assess Kessler and Johar to be sophisticated, well-resourced, and persistent in the pursuit of their stated objectives.

According to the preliminary Schedule 13D filed on November 10, 2022, Pinnacle Harbor beneficially owns 7,119,600 shares of RGC common stock, representing approximately 6.8% of the 104,700,000 shares of common stock outstanding as of the Company's most recent quarterly report on Form 10-Q. The position was accumulated between June 2022 and November 2022 at a weighted-average purchase price of $26.42 per share, implying a total cost basis of approximately $188.1 million. At the engagement opening price of $30.00 per share on November 15, 2022, Pinnacle Harbor's position had a mark-to-market value of approximately $213.6 million, representing an unrealized gain of approximately $25.5 million, or 13.5% on invested capital.

Pinnacle Harbor has retained Garrison Proxy Advisors, LLC ("Garrison Proxy"), led by Managing Director Alicia Trent, as its proxy solicitor. Garrison Proxy is a well-known activist-side proxy solicitation firm with significant experience in contested elections. The retention of Garrison Proxy signals that Pinnacle Harbor is prepared to conduct a full proxy solicitation if necessary, and we should anticipate a professionally managed campaign with significant outreach to institutional holders, retail shareholders, and proxy advisory firms.

Pinnacle Harbor's three principal demands, as articulated in its November 30, 2022 open letter and reiterated in the December 8, 2022 nomination notice, are as follows:

Demand 1 — Board Representation. Pinnacle Harbor demands the appointment of two nominees to the RGC Board of Directors: (a) Dr. Sandra Trevelyan, former Chief Operating Officer of Meridian Interactive Holdings, Inc., a publicly traded interactive gaming company; and (b) Hugh Desmond Grayson, former Chief Financial Officer of Atlas Leisure Group, Inc., a diversified leisure and hospitality conglomerate. Pinnacle Harbor asserts that the current Board lacks sufficient expertise in interactive and digital gaming and that the addition of Trevelyan and Grayson would enhance the Board's strategic oversight capabilities.

Demand 2 — Strategic Review of Interactive Gaming Division. Pinnacle Harbor demands that the Board undertake a formal strategic review of the Company's interactive gaming division, including an evaluation of a potential sale, spin-off, or other separation transaction. Pinnacle Harbor contends that the interactive gaming division is undervalued within the Company's current corporate structure and that a separation would unlock significant shareholder value.

Demand 3 — Capital Return. Pinnacle Harbor demands that the Company return $300 million to shareholders through either a special dividend or an accelerated share repurchase program. Pinnacle Harbor argues that the Company's balance sheet supports a meaningful capital return and that management's current capital allocation strategy underweights shareholder returns relative to peers in the gaming and leisure sector.

B. Current Stock Price and Market Capitalization Context

The Company's common stock trades on the Nasdaq Global Select Market under the ticker symbol "RGC." The following table summarizes key market data as of the relevant dates in the activist timeline:

As of the engagement opening date of November 15, 2022, the Company had 104,700,000 shares of common stock outstanding, yielding a market capitalization of approximately $3.14 billion at the $30.00 per share reference price. The Company currently pays a quarterly dividend yielding approximately 1.8% on an annualized basis. The Company's net debt as of the most recently reported quarter stands at approximately $1.62 billion. Fiscal year 2021 revenue was $2.87 billion, and fiscal year 2022 revenue is projected at approximately $3.05 billion, reflecting year-over-year growth of approximately 6.3%. The interactive gaming division contributed revenue of $412 million in fiscal year 2021, representing approximately 14.4% of total consolidated revenue.

C. Board Composition and Special Committee

The Board of Directors of RGC currently consists of nine directors, seven of whom are independent under Nasdaq listing standards. The two management directors are Gerald R. Whitmore, Chief Executive Officer, and Raymond Choi, Chief Financial Officer. The Board is chaired by Diane K. Sheridan, who qualifies as independent and who has served as Board Chair since September 2019. The Board maintains standing committees for Audit, Compensation, and Nominating & Corporate Governance, each composed entirely of independent directors.

Upon receipt of the preliminary Schedule 13D filing by Pinnacle Harbor on November 10, 2022, the Board convened a special meeting on November 14, 2022, at which it resolved to form a Special Committee of independent directors to oversee the Company's response to the activist campaign. The Special Committee consists of James "Jim" Delacroix (Chair), Carmen Vasquez, and Randall Morse, each of whom is independent under Nasdaq listing standards and free of any material relationships with Pinnacle Harbor or its affiliates. The Special Committee was authorized to engage outside legal counsel, financial advisors, proxy solicitors, and such other advisors as it deemed necessary or appropriate in connection with its mandate. The Special Committee retained Calderwood & Harkness LLP as outside legal counsel effective November 15, 2022, and subsequently approved the retention of Whitfield Morrow Partners, Harlan Ridge Communications, and Calloway Pinnacle Trust Bank as described herein.

III. Shareholder Base Analysis

A thorough understanding of the Company's shareholder base is the foundation of any effective engagement strategy. This section identifies the Company's major institutional holders, assesses their investment styles and likely disposition in a contested or uncontested vote, and provides a combined ownership snapshot to frame the vote arithmetic that will govern the outcome of any proxy contest.

A. Major Institutional Holders

1. Ridgeway Asset Management, LP

Ownership: 8,585,400 shares (8.2% of shares outstanding)

Profile: Ridgeway Asset Management, LP is a long-only value-oriented investment fund headquartered in Boston, Massachusetts. The fund was founded in 2002 and manages approximately $7.8 billion in assets, with a focus on mid-cap and large-cap equities in the consumer, gaming, and industrial sectors. Ridgeway is RGC's single largest institutional shareholder, exceeding Pinnacle Harbor's 6.8% position by a meaningful margin.

Key Contact: Franklin Osei, Portfolio Manager. Mr. Osei has been the lead portfolio manager on Ridgeway's RGC position since the fund first acquired shares in 2017. He has attended RGC's annual meetings in each of the past three years and has met with management on multiple occasions during the Company's investor day events. Ridgeway has historically voted in favor of management's recommended slate and proposals.

Investment Style and Likely Disposition: Ridgeway is a long-term holder that values consistent operational execution, dividend stability, and capital discipline. The fund has a moderate sensitivity to governance issues but is not typically receptive to activist-driven demands that it perceives as short-term in orientation. We assess Ridgeway as generally supportive of incumbent management provided that the Company can demonstrate a credible strategic plan and continued execution against financial targets. Ridgeway is likely to engage substantively with the Company's presentation of its interactive gaming strategy and capital allocation framework.

Strategic Importance: As the single largest holder of RGC common stock — exceeding Pinnacle Harbor's 6.8% position — Ridgeway's public or private support is critical to the success of the Company's defense. If Ridgeway can be secured as a management ally, its 8.2% stake, combined with other management-aligned institutional holders and insider ownership, would provide a substantial block in any contested vote. The loss of Ridgeway's support, conversely, would significantly alter the vote arithmetic in Pinnacle Harbor's favor. We recommend that the engagement with Ridgeway be the highest-priority item in the Phase 2 outreach plan and that Board Chair Sheridan and CEO Whitmore meet with Franklin Osei in person in Boston at the earliest available opportunity in January 2023.

2. Stillwater Capital Advisors, LLC

Ownership: 5,653,800 shares (5.4% of shares outstanding)

Profile: Stillwater Capital Advisors, LLC is a growth-oriented registered investment advisor headquartered in Chicago, Illinois. The firm manages approximately $5.4 billion in assets across a range of growth-equity and GARP (growth-at-a-reasonable-price) strategies. Stillwater has held a position in RGC since early 2020 and has incrementally increased its stake over the past two years, reflecting a constructive view on the Company's growth trajectory, particularly in the interactive gaming segment.

Key Contact: Margaret "Meg" Liu, Head of Governance. Ms. Liu oversees Stillwater's proxy voting and shareholder engagement activities and is known within the institutional investor community for her rigorous, governance-focused approach to contested elections. She maintains active relationships with the proxy advisory firms Centurion Governance Services, Inc. ("Centurion") and Hartley Shareholder Advisory Group, LLC ("Hartley"), and is known to give significant weight to their recommendations in contested situations.

Investment Style and Likely Disposition: Stillwater's growth orientation means that the fund may be sympathetic to arguments about unlocking value in the interactive gaming segment, which could create a point of alignment with Pinnacle Harbor's Demand 2 (strategic review). At the same time, Stillwater is a governance-conscious institution that will evaluate the quality of the Board's composition, the credibility of management's strategic plan, and the track record of capital allocation before deciding how to vote. Stillwater will closely monitor the proxy advisory firm recommendations issued by Centurion and Hartley. If either advisory firm recommends in favor of Pinnacle Harbor's nominees, Stillwater's support for management becomes significantly less certain.

Strategic Importance: Stillwater is the quintessential "swing holder" in this contest. Its 5.4% stake is large enough to be outcome-determinative in a closely contested vote. Proactive and substantive engagement with Meg Liu is essential to prevent Stillwater from aligning with Pinnacle Harbor. The engagement should focus on the Company's governance enhancements, board refreshment efforts, and the Board's own proactive consideration of strategic alternatives for the interactive gaming division. We recommend that the meeting with Stillwater include at least one independent director who can speak credibly to governance and board oversight practices, in addition to CEO Whitmore and, if appropriate, CFO Choi to address capital allocation.

3. Canfield Municipal Employees' Retirement System

Ownership: 2,198,700 shares (2.1% of shares outstanding)

Profile: Canfield Municipal Employees' Retirement System ("Canfield MERS") is a public pension fund headquartered in Canfield, Ohio. The fund serves the retirement needs of approximately 18,000 active and retired municipal employees. Canfield MERS has held a position in RGC since 2019 and is managed by a combination of internal staff and external investment managers.

Key Contact: David Proulx, Chief Investment Officer. Mr. Proulx is responsible for overseeing the fund's investment portfolio, including proxy voting on equity holdings. Canfield MERS follows a formal proxy voting policy that gives significant weight to proxy advisory firm recommendations but also allows for independent judgment when the fund's internal staff concludes that a departure is warranted.

Investment Style and Likely Disposition: Canfield MERS is a conservative, long-term investor that prioritizes stable value creation, dividend income, and adherence to corporate governance best practices. As a public pension fund, Canfield MERS is less likely to support an activist campaign unless there are clear governance deficiencies at the target company. The fund's voting record reflects a pattern of support for incumbent management slates at portfolio companies where governance practices are deemed satisfactory. However, Canfield MERS is also known to be responsive to proxy advisory firm recommendations, and an adverse recommendation from Centurion or Hartley could influence the fund's decision.

Strategic Importance: While Canfield MERS's 2.1% stake is smaller than the positions held by Ridgeway and Stillwater, public pension funds carry reputational weight and influence in the institutional investor community. A public or private indication of support from Canfield MERS would reinforce the narrative that the Company's governance practices and strategic direction enjoy broad-based institutional confidence. We recommend a phone call or video meeting with David Proulx in January 2023, with a focus on the Company's long-term value creation strategy, dividend sustainability, and governance enhancements.

4. Other Known Institutional and Retail Holdings

Beyond the three institutional holders profiled above, the Company's shareholder base includes a significant number of additional institutional holders, passive index funds, and retail investors. The precise composition of the remaining float requires updated beneficial ownership data, which we have requested from the Company's transfer agent, Continental Share Services, Inc., through Vice President Jason Velmoran. Specifically, we have requested an updated DTC participant list and a NOBO/OBO breakdown (non-objecting beneficial owner / objecting beneficial owner), which will enable Whitfield Morrow to conduct a comprehensive shareholder identification and segmentation analysis.

Preliminary estimates, based on the Company's most recent SEC filings and publicly available 13F data, suggest that passive and index fund holders (including funds managed by major index fund families) account for approximately 25–30% of shares outstanding. These holders will vote in accordance with their respective stewardship and proxy voting guidelines, which vary by firm but generally reflect a governance-focused approach. The remaining float is distributed among smaller institutional holders and retail investors. Retail ownership is estimated to account for approximately 15–20% of shares outstanding, and retail shareholders historically exhibit lower participation rates in contested elections but can be mobilized through targeted telephone and digital solicitation campaigns conducted by Whitfield Morrow.

We anticipate that the shareholder identification analysis to be completed by Whitfield Morrow in Phase 1 will provide a significantly more granular view of the Company's ownership profile, including identification of additional top-20 holders that should be prioritized for direct engagement.

B. Combined Ownership Snapshot Table

The following table summarizes known and estimated ownership positions as of December 2022:

Vote Math Analysis. In a plurality voting system, which governs contested director elections under RGC's Amended and Restated Bylaws, the nominees who receive the greatest number of votes cast will be elected to the available Board seats. Under the SEC's universal proxy card rules (Rule 14a-19, effective September 1, 2022), both the Company and Pinnacle Harbor will be required to list all nominees on a single proxy card, enabling shareholders to mix and match nominees from both slates. This dynamic makes individual director-level support — rather than slate-level support — the critical variable.

The combined holdings of Ridgeway Asset Management (8.2%), Stillwater Capital Advisors (5.4%), and Canfield MERS (2.1%) represent 16,437,900 shares, or approximately 15.7% of outstanding shares. When combined with estimated management and insider holdings of approximately 2.4%, these holders represent approximately 18.1% of shares outstanding. Securing the support of all three institutions, together with management-aligned votes and a reasonable proportion of remaining institutional and retail votes, would provide a strong foundation for prevailing in a contested election. Conversely, if Pinnacle Harbor secures the support of Stillwater (5.4%) and a meaningful portion of index fund and retail votes, the contest becomes significantly more competitive, underscoring the urgency of early and proactive engagement with swing holders.

IV. Advisor Team and Coordination Framework

The Company has assembled a team of experienced advisors to support the Board and Special Committee in responding to the activist campaign. Effective coordination among these advisors, under Calderwood & Harkness's direction, is essential to ensuring a unified and consistent approach to shareholder engagement, messaging, and, if necessary, proxy solicitation. This section outlines the role, key deliverables, and contact information for each advisor, as well as the coordination protocol that will govern the working relationship among the team.

A. Proxy Solicitor — Whitfield Morrow Partners, LLC

Lead Contact: Denise Cavanaugh, Senior Vice President

Office: 501 Madison Avenue, 14th Floor, New York, New York 10022

Role and Responsibilities: Whitfield Morrow Partners, LLC is retained to manage the Company's shareholder solicitation process throughout the duration of the activist campaign. Whitfield Morrow's responsibilities include: obtaining and analyzing beneficial ownership data from the Company's transfer agent and DTC participants; conducting detailed shareholder identification and segmentation analysis by investment style, voting history, and governance orientation; building and maintaining a vote projection model for both contested and uncontested scenarios; leading telephone and digital solicitation campaigns targeting institutional and retail shareholders; and managing vote tabulation efforts during the proxy solicitation window. Whitfield Morrow has extensive experience in contested proxy solicitations in the gaming and consumer sectors and is well-positioned to provide strategic counsel on shareholder dynamics throughout the engagement.

Immediate Deliverables Requested:

(1) An updated beneficial ownership report based on the most recent DTC participant list and NOBO/OBO data obtained from Continental Share Services, Inc.;

(2) A shareholder segmentation analysis categorizing holders by investment style (value, growth, index/passive, activist, hedge fund, retail) and assessing their likely disposition in a contested election; and

(3) A preliminary vote projection model for both contested and uncontested scenarios, incorporating assumptions regarding voter turnout, proxy advisory firm recommendations, and holder disposition.

B. Investor Relations Advisor — Harlan Ridge Communications, LLC

Lead Contact: Philip Navarette, Partner

Office: 712 Fifth Avenue, Suite 900, New York, New York 10019

Role and Responsibilities: Harlan Ridge Communications, LLC is retained to develop and execute the Company's messaging and communications strategy in connection with the activist campaign. Harlan Ridge's responsibilities include: developing a comprehensive messaging framework and frequently asked questions document for use by Company spokespersons in shareholder meetings; preparing an updated investor presentation deck that highlights the Company's strategic plan, the value proposition of the interactive gaming division, and the Board's governance credentials; coordinating media relations, including monitoring press coverage, managing inquiries from financial journalists, and preparing the Company's public response to Pinnacle Harbor's open letter and any subsequent public communications; assisting in the drafting of shareholder correspondence, including letters to shareholders that may accompany proxy materials; and advising on the tone, timing, and sequencing of all public and private communications related to the campaign.

Immediate Deliverables Requested:

(1) A key messaging framework and Q&A document for use by Board Chair Sheridan, CEO Whitmore, and other approved spokespersons in shareholder meetings, to be reviewed by Calderwood & Harkness for Regulation FD compliance prior to distribution;

(2) An updated investor presentation deck highlighting the Company's strategic plan, the interactive gaming division's growth trajectory and value proposition, capital allocation track record, and corporate governance profile; and

(3) A media monitoring and response protocol, including procedures for tracking media coverage, responding to press inquiries, and issuing proactive press releases or statements.

C. Financial Advisor — Calloway Pinnacle Trust Bank

Lead Contact: Thomas V. Ashford, Managing Director, Activism & Corporate Defense

Office: 200 Park Avenue, 28th Floor, New York, New York 10166

Role and Responsibilities: Calloway Pinnacle Trust Bank is retained to provide financial analysis supporting management's strategic position and to participate in key institutional investor meetings to present the financial case for the Company's current strategy and governance. Calloway Wainwright's responsibilities include: preparing a sum-of-the-parts valuation of RGC, with a particular focus on the interactive gaming division, to demonstrate the Company's full value within its current corporate structure; analyzing capital return alternatives, including the feasibility and shareholder implications of Pinnacle Harbor's $300 million capital return demand in light of the Company's net debt position and growth investment needs; preparing peer benchmarking analyses on governance, board composition, capital allocation, and shareholder returns; and participating in meetings with key institutional holders alongside Company management and independent directors to present financial data and respond to investor questions.

Immediate Deliverables Requested:

(1) A preliminary sum-of-the-parts analysis of RGC, including a standalone valuation of the interactive gaming division and a comparison to publicly traded interactive gaming peers;

(2) A capital allocation and shareholder return analysis comparing RGC's current return profile (including the 1.8% dividend yield and existing share repurchase program) to peers and evaluating the financial impact of various capital return scenarios, including Pinnacle Harbor's $300 million demand; and

(3) A peer benchmarking study on governance and board composition, comparing RGC's board structure, committee composition, director qualifications, and governance practices to those of comparable public gaming and leisure companies.

D. Coordination Protocol

Effective coordination among the Company's advisors is essential to the success of the shareholder engagement strategy. To ensure consistent messaging, avoid duplication of effort, and preserve applicable privileges, we have established the following coordination protocol:

Weekly Coordination Calls. Calderwood & Harkness will convene weekly coordination calls with all advisors, including Whitfield Morrow (Cavanaugh), Harlan Ridge (Navarette), and Calloway Wainwright (Ashford). Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of RGC, will participate in each call to ensure alignment between the advisor team and Company management. These calls will be scheduled for Wednesday mornings at 9:00 a.m. Eastern Time, beginning January 4, 2023, and will continue on a weekly cadence until the activist campaign is resolved. The calls will follow a standing agenda that includes: (i) status update from each advisor; (ii) review of shareholder engagement activity since the prior call; (iii) review of media coverage and Pinnacle Harbor activity; (iv) discussion of upcoming milestones and deliverables; and (v) identification of issues requiring Special Committee attention.

Shared Privileged Workstream Tracker. Calderwood & Harkness will maintain a shared workstream tracker that documents all ongoing work streams, deliverables, deadlines, and responsibilities across the advisor team. All communications among advisors related to the activist campaign should be routed through Calderwood & Harkness or should include Calderwood & Harkness counsel on the communication, in order to preserve the attorney-client privilege and work product protection that applies to legal advice rendered in connection with the campaign. Advisors are instructed to mark all written communications related to the activist campaign as "PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE — ATTORNEY WORK PRODUCT" and to refrain from sharing such communications with any third party without the prior approval of Calderwood & Harkness.

Reporting to Special Committee. Calderwood & Harkness will provide the Special Committee with bi-weekly written updates summarizing the status of the shareholder engagement strategy, including shareholder feedback, vote projections, advisor deliverables, and any material developments. In addition, Calderwood & Harkness will provide ad hoc updates to the Special Committee on any material development that warrants immediate attention, including the receipt of Pinnacle Harbor's formal nomination notice, any public communications by Pinnacle Harbor, any contact from proxy advisory firms, and any significant shift in shareholder sentiment.

V. Recommended Outreach Timeline and Phases

The shareholder engagement strategy is organized into four phases, each with defined objectives, activities, and timelines. The phases are designed to be sequential but overlapping, with earlier phases informing and enabling subsequent phases. We note at the outset that Phase 4 (Active Solicitation) would only be triggered if the activist campaign proceeds to a full proxy contest, and that the ultimate objective is to resolve the situation through negotiated settlement (Phase 1 and Phase 2 outcomes) or, failing that, to prevail in a contested vote. As discussed in Section X below, the campaign was ultimately resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, and Phases 3 and 4 were not fully executed.

Phase 1: Intelligence Gathering and Preparation (Late December 2022 – Early January 2023)

The first phase of the engagement strategy focuses on assembling the information and materials necessary to support effective shareholder outreach. Specific activities in this phase include:

Shareholder Identification. Whitfield Morrow Partners will obtain an updated shareholder list from the Company's transfer agent, Continental Share Services, Inc. (Jason Velmoran, Vice President). The request will include the most recent DTC participant list and a NOBO/OBO breakdown, which will identify both non-objecting beneficial owners (who may be contacted directly) and objecting beneficial owners (who may be contacted only through their intermediary broker-dealers). This data will form the basis for Whitfield Morrow's shareholder identification and segmentation analysis, which will categorize holders by investment style, geographic location, estimated holding period, and likely disposition in a contested election.

Messaging and Materials Development. Harlan Ridge Communications will finalize the messaging framework and investor materials described in Section IV.B above. All materials will be submitted to Calderwood & Harkness for review prior to use, to ensure compliance with Regulation FD and consistency with the Company's overall communications strategy.

Financial Analysis. Calloway Pinnacle Trust Bank will deliver its preliminary sum-of-the-parts analysis, capital allocation analysis, and peer benchmarking study as described in Section IV.C above. These analyses will inform the key messages and talking points used in shareholder meetings and will provide the financial foundation for the Company's response to Pinnacle Harbor's demands.

Legal Analysis. Calderwood & Harkness will complete its analysis of the compliance of Pinnacle Harbor's nomination notice with the Advance Notice Provision of the Company's Amended and Restated Bylaws. A preliminary compliance analysis was delivered to the Special Committee on December 14, 2022. The nominee qualification and deficiency review is targeted for completion by January 13, 2023, two days after the close of the advance-notice window on January 11, 2023, to allow for evaluation of any supplemental information provided by Pinnacle Harbor within the window.

Spokesperson Preparation. Board Chair Diane Sheridan and CEO Gerald Whitmore will participate in preparation sessions, including mock question-and-answer exercises, to ensure that they are fully prepared for shareholder meetings. These sessions will be facilitated by Harlan Ridge and Calderwood & Harkness and will cover the full range of topics likely to arise in institutional investor meetings, including the Company's strategic plan, the interactive gaming division, capital allocation, Pinnacle Harbor's specific demands, and governance practices. CFO Raymond Choi will also participate in preparation sessions to the extent that financial data and capital allocation topics will be addressed in shareholder meetings.

Phase 2: Proactive Institutional Outreach (January 2023)

The second phase of the engagement strategy involves direct, proactive outreach to the Company's largest and most strategically important institutional shareholders. The objective of this phase is to present the Company's strategic plan, address shareholder questions and concerns, and build a foundation of institutional support that can be relied upon in a contested or uncontested vote.

Outreach during this phase will be led by Board Chair Sheridan, CEO Whitmore, and/or independent directors as appropriate for each specific engagement, with support from Harlan Ridge and Calloway Wainwright. The priority targets and recommended engagement formats are as follows:

Ridgeway Asset Management, LP (Franklin Osei, Portfolio Manager). We recommend an in-person meeting in Boston at Ridgeway's offices at the earliest available date in the week of January 8, 2023. The meeting should be attended by Board Chair Sheridan and CEO Whitmore, with Philip Navarette (Harlan Ridge) and Thomas Ashford (Calloway Wainwright) in support. The meeting should present the Company's strategic plan with particular emphasis on the interactive gaming division's growth trajectory, revenue and margin targets, and management's vision for the division within the broader RGC portfolio. The capital allocation framework should also be presented, including the rationale for current dividend levels and share repurchase activity.

Stillwater Capital Advisors, LLC (Meg Liu, Head of Governance). We recommend an in-person meeting in Chicago or, if scheduling does not permit an in-person meeting in the Phase 2 timeframe, a video conference meeting. Given Ms. Liu's governance focus, the meeting should be attended by Board Chair Sheridan and at least one independent director who can speak to the Board's governance practices, committee structure, and board refreshment efforts. CEO Whitmore should also attend to address strategic questions. The meeting should proactively address the strategic review question — acknowledging that the Board and management continuously evaluate strategic alternatives for all business segments and presenting the Board's own assessment of the interactive gaming division — without committing to any specific process or outcome. Governance enhancements should be highlighted, including any board refreshment or succession planning activities.

Canfield Municipal Employees' Retirement System (David Proulx, Chief Investment Officer). We recommend a phone call or video meeting with Mr. Proulx. Given the fund's conservative orientation and emphasis on long-term value and dividend income, the meeting should focus on the Company's long-term value creation strategy, the sustainability and growth potential of the current dividend, and the Board's governance credentials. Board Chair Sheridan should lead the engagement, with CEO Whitmore available to address financial and strategic questions.

In addition to these priority engagements, secondary outreach should be conducted with additional top-20 holders as identified through Whitfield Morrow's shareholder identification analysis. Whitfield Morrow will provide a prioritized target list with recommended engagement formats (in-person, video, telephone) based on holder size, disposition, and strategic importance.

All engagements must be logged in the advisor team's shared workstream tracker, and detailed records of each engagement — including date, attendees, topics discussed, shareholder questions, and shareholder feedback — must be maintained and shared with Calderwood & Harkness for inclusion in the bi-weekly Special Committee update. As noted below in Section VII, all outreach must be conducted in strict compliance with Regulation FD, and no material non-public information may be disclosed during investor conversations.

Phase 3: Proxy Advisory Firm Engagement (January – February 2023, if Contest Materializes)

If the activist campaign proceeds to a formal proxy contest — that is, if Pinnacle Harbor files a preliminary proxy statement with the SEC and begins soliciting proxies from RGC shareholders — the Company will need to engage proactively with the two principal proxy advisory firms, Centurion Governance Services, Inc. ("Centurion") and Hartley Shareholder Advisory Group, LLC ("Hartley"). The recommendations issued by these firms are closely followed by many institutional investors, including Stillwater Capital Advisors and Canfield MERS, and can have a significant impact on the outcome of a contested election.

We anticipate that Pinnacle Harbor may file a preliminary proxy statement in late January or February 2023 if settlement discussions do not progress. We note, for the Special Committee's information, that Pinnacle Harbor prepared a draft preliminary proxy statement and circulated it internally to its counsel, Hargrove Sloane & Birch LLP, on or about February 9, 2023, but as of the date of this memorandum's most recent update, Pinnacle Harbor has not filed the document with the SEC.

In the event that a proxy contest materializes, the Company's submissions to Centurion and Hartley should include:

(1) A detailed rebuttal to each of Pinnacle Harbor's three demands, supported by financial analysis from Calloway Wainwright and governance data;

(2) A comprehensive board skills matrix demonstrating the existing competencies represented on the RGC Board, including industry expertise, financial acumen, technology and digital strategy experience, and operational leadership;

(3) An overview of the Company's interactive gaming strategy, including growth targets, competitive positioning, and management's rationale for maintaining the division within the RGC portfolio;

(4) The Company's capital allocation track record, including historical returns to shareholders through dividends and share repurchases, and a comparison to peer companies;

(5) A summary of corporate governance enhancements implemented or planned by the Board, including any board refreshment activities, bylaw amendments, or governance policy updates.

Calderwood & Harkness and Harlan Ridge will coordinate the preparation of the proxy advisory firm submissions, with financial analysis contributed by Calloway Wainwright. Meetings with proxy advisory firm analysts should be scheduled as soon as possible following the filing of proxy materials by either party, and should include Board Chair Sheridan, CEO Whitmore, and at least one additional independent director.

We note that the proxy advisory firm recommendations were never finalized in the RGC/Pinnacle Harbor matter, as the campaign was resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, prior to the firms' issuance of reports. Nevertheless, the Company should remain prepared to engage with Centurion and Hartley throughout the advance-notice and proxy solicitation period, as a reversal of settlement discussions or an escalation by Pinnacle Harbor could reactivate the need for proxy advisory firm engagement at any time.

Phase 4: Active Solicitation (If Proxy Contest Proceeds — February – May 2023)

If settlement efforts are unsuccessful and the proxy contest proceeds to a shareholder vote at the Company's 2023 annual meeting of stockholders, Whitfield Morrow Partners will execute a full proxy solicitation campaign. This phase represents the maximum level of advisor mobilization and shareholder engagement and would involve the following activities:

Solicitation Campaign. Whitfield Morrow will conduct a comprehensive proxy solicitation campaign using telephone, mail, and digital channels. The campaign will target both institutional and retail shareholders, with tailored messaging and outreach strategies for each segment. Institutional holders will be contacted by senior Whitfield Morrow professionals, with key holders receiving direct outreach from Board Chair Sheridan, CEO Whitmore, and independent directors. Retail shareholders will be contacted through automated and live telephone solicitation, direct mail, and digital communications (email and online platforms).

Record Date and Solicitation Window. The Board is expected to set the record date for the 2023 annual meeting in approximately March or April 2023, with the annual meeting anticipated to be held in May 2023. The proxy solicitation window — the period during which the Company and Pinnacle Harbor may solicit proxies from shareholders — will begin upon the filing and distribution of definitive proxy materials and will continue through the date of the annual meeting.

Universal Proxy Card Considerations. The SEC's universal proxy card rules under Rule 14a-19, which became effective on September 1, 2022, will apply to any contested election at the 2023 annual meeting. Under these rules, both the Company and Pinnacle Harbor will be required to include all director nominees (from both slates) on a single universal proxy card, enabling shareholders to vote for any combination of Company and Pinnacle Harbor nominees up to the number of available Board seats. This rule change fundamentally alters the dynamics of proxy contests by eliminating the historical advantage enjoyed by the side that solicited a shareholder's proxy card first. Under the universal proxy card regime, individual director-level support becomes the critical variable, and the Company must be prepared to make a compelling case for each of its nominated directors on a director-by-director basis.

Vote Tracking and Reporting. During the solicitation window, Whitfield Morrow will provide daily vote tallies to Calderwood & Harkness and RGC General Counsel Nakamura, reflecting the number of shares voted in favor of the Company's slate, Pinnacle Harbor's nominees, and any withheld or abstained shares. These tallies will be reported to the Special Committee in real time and will inform decisions regarding the escalation of outreach efforts to uncommitted holders.

Escalation. If vote tallies indicate that the Company is at risk of losing one or more Board seats, the advisor team will escalate outreach efforts to uncommitted and undecided holders, including additional telephone solicitation, targeted correspondence from Board Chair Sheridan, and direct engagement by independent directors. The Special Committee will be consulted on all escalation decisions.

We note, for the Special Committee's information, that Phase 4 was not reached in the RGC/Pinnacle Harbor matter. The activist campaign was resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, as discussed in Section X below.

VI. Key Messaging and Talking Points

The following messaging framework has been developed in consultation with Harlan Ridge Communications and is designed to provide a consistent, fact-based narrative for use in shareholder meetings, public communications, and proxy advisory firm submissions. All talking points are subject to Regulation FD review by Calderwood & Harkness prior to use and should not be supplemented or modified without prior consultation with outside counsel. A more detailed set of talking points and a comprehensive Q&A document will be included in Appendix C to this memorandum, marked "DRAFT — Subject to Reg FD Review by Calderwood & Harkness."

A. Strategic Direction and Value Creation

The Company's strategic direction is producing strong and consistent results. Fiscal year 2021 revenue was $2.87 billion, and fiscal year 2022 revenue is projected at approximately $3.05 billion, representing year-over-year growth of approximately 6.3%. This growth reflects the execution of a balanced strategy that combines stable cash flows from the Company's established resort and casino operations with accelerating growth in the interactive gaming division.

The interactive gaming division is a key growth engine for the Company. The division generated revenue of $412 million in fiscal year 2021, representing approximately 14.4% of total consolidated revenue, and is expected to increase its revenue contribution as management invests in digital platform expansion, customer acquisition, and new market entry. Management has a clear and well-articulated plan to accelerate the growth of the interactive gaming division while preserving the integrated benefits of the division's relationship with the Company's physical gaming and resort operations.

The Company's stock price has appreciated meaningfully in recent months, rising from $24.18 per share on June 1, 2022 to $31.74 per share on November 30, 2022 — an increase of approximately 31% — reflecting the market's recognition of the Company's value creation trajectory. This appreciation predates Pinnacle Harbor's public activism and is attributable to the Company's operational execution and strategic positioning.

The Company's net debt of $1.62 billion is manageable relative to its revenue base and cash flow generation, and the Company maintains investment-grade credit quality and access to diversified sources of capital. The balance sheet supports both continued strategic investment and an ongoing commitment to shareholder returns.

B. Board Quality and Governance

The RGC Board of Directors is a well-constituted, highly qualified, and independent board that provides effective oversight of the Company's strategy and operations. The Board comprises nine directors, seven of whom are independent under Nasdaq listing standards, reflecting a significant supermajority of independent directors. The Board is chaired by Diane K. Sheridan, an independent director, ensuring robust separation of the Board Chair and CEO roles and providing independent leadership of Board activities.

The Board maintains a strong committee structure, with three standing committees — Audit, Compensation, and Nominating & Corporate Governance — each composed entirely of independent directors. The Board's members bring a diverse range of relevant experience and expertise, including deep knowledge of the gaming industry, financial and capital markets expertise, technology and digital strategy experience, and operational leadership in complex, regulated businesses.

The Company's corporate governance practices reflect best-in-class standards. Recent bylaw amendments adopted on September 12, 2021 incorporated governance best practices including enhanced proxy access provisions, majority voting in uncontested director elections, and updated advance-notice requirements. The Board is committed to ongoing refreshment and succession planning, and actively evaluates its composition and the skills, experience, and diversity of its members on a regular basis.

C. Response to Pinnacle Harbor's Specific Demands

Two Board Seats. The Board acknowledges Pinnacle Harbor's right to nominate directors through the Company's advance-notice process and takes seriously the perspectives of all shareholders. However, the Board believes that it is already well-constituted with the relevant expertise necessary to oversee the Company's strategy and operations, including the interactive gaming division. The Board notes that Pinnacle Harbor's nominees may present complications under applicable gaming regulatory licensing requirements, as each director of a publicly traded gaming company is typically required to obtain gaming licenses in multiple jurisdictions in which the Company operates. The Board is also evaluating whether Pinnacle Harbor's nominees meet the independence standards required under Nasdaq listing rules, given their prior professional relationships with Pinnacle Harbor's advisory network. The Board remains open to considering highly qualified director candidates through its established Nominating & Corporate Governance Committee processes.

Strategic Review of Interactive Gaming. The Board and management continuously evaluate strategic alternatives for all of the Company's business segments, including the interactive gaming division. This is a core responsibility of the Board and does not require external direction from a 6.8% shareholder. An externally mandated strategic review, conducted under the pressure of an activist campaign and with a predetermined focus on separation, is premature and risks destroying value by signaling to the market, competitors, and employees that the Company is open to a transaction that may not be in the best interests of all shareholders. The Board will continue to evaluate all strategic alternatives in the ordinary course and will act when and if it determines that doing so would be in the best interests of the Company and all of its shareholders.

$300 Million Capital Return. RGC maintains a disciplined capital allocation strategy that balances shareholder returns with growth investment and balance sheet management. The Company's current annualized dividend yield of approximately 1.8% reflects its commitment to returning capital to shareholders, and the Company has an active share repurchase program. Pinnacle Harbor's demand for a $300 million special dividend or accelerated buyback must be evaluated in light of the Company's existing net debt of $1.62 billion, its growth investment needs — particularly in the interactive gaming division — and the potential impact on the Company's credit profile and financial flexibility. The Board will continue to evaluate capital return alternatives as part of its ongoing capital allocation process.

D. Pinnacle Harbor's Short-Term Orientation

Pinnacle Harbor accumulated its entire position in RGC common stock between June and November 2022, a period of approximately five months. This relatively short holding period contrasts sharply with the long-term investment horizons of the Company's core institutional shareholders, including Ridgeway Asset Management (holding since 2017), Stillwater Capital Advisors (holding since 2020), and Canfield MERS (holding since 2019). Pinnacle Harbor's weighted-average purchase price of $26.42 per share, compared to the current market price of approximately $31 per share, suggests that the fund is already sitting on meaningful unrealized gains and may be motivated to pursue short-term value-realization strategies that do not align with the interests of long-term holders.

Pinnacle Harbor's event-driven activist strategy, which focuses on agitating for specific corporate actions over relatively short time horizons, is fundamentally different from the long-term, buy-and-hold investment strategies employed by the majority of RGC's institutional shareholder base. The $300 million capital return demand, in particular, appears designed to generate near-term returns for Pinnacle Harbor's fund while potentially constraining the Company's strategic flexibility and financial capacity to invest in long-term growth initiatives, including the interactive gaming division that Pinnacle Harbor itself identifies as undervalued.

VII. Regulation FD Compliance Protocol

Compliance with Regulation FD (17 C.F.R. § 243.100 et seq.) is of paramount importance in all shareholder engagement activities. Regulation FD prohibits a public company from selectively disclosing material non-public information to certain categories of market participants — including institutional investors and analysts — unless the information is simultaneously disclosed to the public. Violations of Regulation FD can result in SEC enforcement actions and significant reputational harm. The Company's shareholder outreach activities must therefore be conducted within a rigorous compliance framework.

The following protocol will govern all shareholder communications in connection with the activist campaign:

Pre-Clearance of Materials. All talking points, scripts, investor presentations, Q&A documents, shareholder correspondence, and other materials to be used in or distributed during shareholder meetings must be reviewed and approved by Calderwood & Harkness prior to use. This review will focus on identifying any statements that could constitute the disclosure of material non-public information and ensuring that all materials are consistent with the Company's public disclosures.

Approved Spokespersons. Participants in shareholder meetings will be limited to the following approved spokespersons: Board Chair Diane K. Sheridan; CEO Gerald R. Whitmore; CFO Raymond Choi (for financial data and capital allocation topics); and General Counsel Patricia "Trish" Nakamura (for governance matters and legal compliance). Advisors from Harlan Ridge Communications, Calloway Pinnacle Trust Bank, and Calderwood & Harkness may participate in shareholder meetings in a support capacity but should not independently address shareholders on substantive topics without coordination with the approved spokespersons.

Prohibition on Selective Disclosure. No approved spokesperson or advisor may disclose material non-public information to any shareholder, analyst, proxy advisory firm representative, or other market participant during the course of shareholder engagement activities. Information that may be discussed in shareholder meetings is limited to: (i) information that has been publicly disclosed by the Company in its SEC filings, press releases, investor presentations, and other public communications; (ii) the Company's publicly articulated strategic plan and capital allocation framework; (iii) the Company's publicly available corporate governance policies and practices; and (iv) the Company's response to Pinnacle Harbor's public demands, as set forth in the approved talking points.

Engagement Records. Detailed records of each shareholder engagement must be maintained, including: the date and time of the engagement; the names and titles of all attendees (both Company-side and shareholder-side); the format of the engagement (in-person, video, telephone); the topics discussed; any questions posed by the shareholder; the Company's responses; and any feedback or indications of sentiment provided by the shareholder. These records will be maintained by Calderwood & Harkness and included in the bi-weekly Special Committee updates.

Inadvertent Disclosure Protocol. In the event that material non-public information is inadvertently disclosed during a shareholder engagement, the following escalation protocol will apply:

(a) The approved spokesperson who made or became aware of the inadvertent disclosure must immediately notify Calderwood & Harkness (Douglas Fairchild or Claire Dempsey) and General Counsel Nakamura;

(b) Calderwood & Harkness will assess whether the disclosed information constitutes material non-public information within the meaning of Regulation FD;

(c) If Calderwood & Harkness determines that the disclosure constitutes a Regulation FD event, the Company will file a Form 8-K with the SEC disclosing the information to the public as promptly as practicable, and in no event later than the end of the next business day following the determination; and

(d) Calderwood & Harkness and General Counsel Nakamura will evaluate whether any additional remedial measures are necessary, including issuance of a press release or supplemental public disclosure.

All approved spokespersons and advisors will be briefed on this protocol prior to the commencement of Phase 2 shareholder outreach.

VIII. Coordination with D&O Insurance and Indemnification

The activist campaign gives rise to potential liability exposures for the Company's directors and officers, and it is important that directors participating in shareholder outreach activities be aware of the protections available to them under the Company's directors' and officers' liability insurance program and indemnification provisions.

Notice to D&O Carriers. A notice of circumstances was submitted to the Company's D&O insurance carriers on November 16, 2022, two days after the formation of the Special Committee, through the Company's insurance broker, Glenmore Caulfield Insurance Brokers, Inc. (Sarah Voss, Senior Vice President). The notice described the Pinnacle Harbor activist campaign and the formation of the Special Committee, and preserved the Company's right to submit claims under the policy in the event that the campaign gives rise to covered losses.

Insurance Program Structure. The Company's D&O insurance program consists of the following layers:

The primary policy provides coverage for directors and officers for losses arising from claims made against them in their

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Special Committee of the Board of Directors of Redstone Gaming Corp.
James "Jim" Delacroix (Chair) Carmen Vasquez Randall Morse
CC: Diane K. Sheridan (Board Chair); Patricia "Trish" Nakamura (General Counsel & Corporate Secretary); Gerald R. Whitmore (CEO); Raymond Choi (CFO)
FROM: Douglas Fairchild, Engagement Partner, and Claire Dempsey, Lead Associate, Calderwood & Harkness LLP
DATE: December 20, 2022
RE: Shareholder Outreach and Engagement Strategy — Defense Against Pinnacle Harbor Capital Partners, LP Activist Campaign
Matter No.: 1033-00003
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I. Executive Summary
The purpose of this memorandum is to provide the Special Committee of the Board of Directors of Redstone Gaming Corp. ("RGC" or the "Company") with a comprehensive shareholder engagement strategy designed to secure broad institutional support for the RGC management slate and to counter the activist campaign launched by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"). This memorandum reflects our assessment of the current landscape, the composition of the Company's shareholder base, the coordination framework among the Company's advisors, and the recommended phases of engagement, messaging, and contingency planning necessary to position RGC favorably in any contested or uncontested shareholder vote.
The activist situation arose when Pinnacle Harbor disclosed a 6.8% beneficial ownership stake in RGC, representing 7,119,600 shares of common stock out of 104,700,000 shares outstanding, via a preliminary Schedule 13D filed with the Securities and Exchange Commission on November 10, 2022. On November 30, 2022, Pinnacle Harbor issued a public open letter to the Board and shareholders of RGC, in which it articulated three principal demands: (1) the immediate appointment of two Pinnacle Harbor nominees — Dr. Sandra Trevelyan and Hugh Desmond Grayson — to the Board of Directors; (2) a formal strategic review of the Company's interactive gaming division, including consideration of a potential sale or spin-off of the division; and (3) the return of $300 million in capital to shareholders through either a special dividend or an accelerated share repurchase program.
Pinnacle Harbor's outside counsel, Hargrove Sloane & Birch LLP, acting through partner Jonathan Birch III, sent formal notice of intent to nominate directors at the Company's 2023 annual meeting of stockholders on December 8, 2022, pursuant to Article II, Section 2.11 of the RGC Amended and Restated Bylaws (the "Advance Notice Provision"). The advance-notice window for director nominations opened on December 12, 2022 — 150 days before the anniversary of the Company's May 11, 2022 annual meeting of stockholders — and closes on January 11, 2023 — 120 days before the anniversary of the 2022 annual meeting. Accordingly, any compliant nomination notice from Pinnacle Harbor must be received by the Corporate Secretary on or before January 11, 2023.
This memorandum outlines a coordinated outreach effort involving Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H"), the Company's proxy solicitor Whitfield Morrow Partners, LLC ("Whitfield Morrow"), through Senior Vice President Denise Cavanaugh, the Company's investor relations advisor Harlan Ridge Communications, LLC ("Harlan Ridge"), through Partner Philip Navarette, and the Company's financial advisor Calloway Pinnacle Trust Bank ("Calloway Wainwright"), through Managing Director Thomas V. Ashford, in his capacity as head of the firm's Activism & Corporate Defense practice. The strategy also contemplates coordination with the Company's transfer agent, Continental Share Services, Inc., and with senior Company management and independent directors who will serve as principal spokespersons in shareholder meetings.
Based on our analysis, we recommend that the Company begin proactive institutional outreach no later than the first full week of January 2023, well ahead of a potential proxy contest at the 2023 annual meeting of stockholders, which is anticipated to be held in May 2023. Early engagement with key institutional holders — in particular Ridgeway Asset Management, LP (8.2%), Stillwater Capital Advisors, LLC (5.4%), and Canfield Municipal Employees' Retirement System (2.1%) — is essential to establishing a foundation of support that can withstand Pinnacle Harbor's solicitation efforts and any adverse proxy advisory firm recommendations. The Special Committee should authorize the immediate commencement of Phase 1 preparatory activities as described in this memorandum and approve the proposed outreach timeline through Phase 4.
II. Overview of the Activist Situation
A. Pinnacle Harbor Capital Partners, LP — Profile and Demands
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's principal office is located at 590 Madison Avenue, 34th Floor, New York, New York 10022. Pinnacle Harbor was founded in 2014 and currently manages assets under management of approximately $4.2 billion. The fund pursues an event-driven and activist equity strategy with a particular focus on mid-cap companies in the gaming, hospitality, and consumer-discretionary sectors. Pinnacle Harbor has a well-documented track record of agitating for board representation, operational changes, and capital returns at target companies, having conducted public activist campaigns at approximately eight portfolio companies since 2017.
The fund's Managing Partner and Chief Investment Officer is Viktor S. Kessler (age 47), who co-founded the firm and maintains primary decision-making authority over portfolio allocation and activist strategy. The Head of Activism and Portfolio Manager responsible for the RGC position is Nadia Johar (age 39), a former sell-side analyst who joined Pinnacle Harbor in 2016 and has led several of the fund's most prominent campaigns. Based on our prior interactions with Pinnacle Harbor in other activist situations, we assess Kessler and Johar to be sophisticated, well-resourced, and persistent in the pursuit of their stated objectives.
According to the preliminary Schedule 13D filed on November 10, 2022, Pinnacle Harbor beneficially owns 7,119,600 shares of RGC common stock, representing approximately 6.8% of the 104,700,000 shares of common stock outstanding as of the Company's most recent quarterly report on Form 10-Q. The position was accumulated between June 2022 and November 2022 at a weighted-average purchase price of $26.42 per share, implying a total cost basis of approximately $188.1 million. At the engagement opening price of $30.00 per share on November 15, 2022, Pinnacle Harbor's position had a mark-to-market value of approximately $213.6 million, representing an unrealized gain of approximately $25.5 million, or 13.5% on invested capital.
Pinnacle Harbor has retained Garrison Proxy Advisors, LLC ("Garrison Proxy"), led by Managing Director Alicia Trent, as its proxy solicitor. Garrison Proxy is a well-known activist-side proxy solicitation firm with significant experience in contested elections. The retention of Garrison Proxy signals that Pinnacle Harbor is prepared to conduct a full proxy solicitation if necessary, and we should anticipate a professionally managed campaign with significant outreach to institutional holders, retail shareholders, and proxy advisory firms.
Pinnacle Harbor's three principal demands, as articulated in its November 30, 2022 open letter and reiterated in the December 8, 2022 nomination notice, are as follows:
Demand 1 — Board Representation. Pinnacle Harbor demands the appointment of two nominees to the RGC Board of Directors: (a) Dr. Sandra Trevelyan, former Chief Operating Officer of Meridian Interactive Holdings, Inc., a publicly traded interactive gaming company; and (b) Hugh Desmond Grayson, former Chief Financial Officer of Atlas Leisure Group, Inc., a diversified leisure and hospitality conglomerate. Pinnacle Harbor asserts that the current Board lacks sufficient expertise in interactive and digital gaming and that the addition of Trevelyan and Grayson would enhance the Board's strategic oversight capabilities.
Demand 2 — Strategic Review of Interactive Gaming Division. Pinnacle Harbor demands that the Board undertake a formal strategic review of the Company's interactive gaming division, including an evaluation of a potential sale, spin-off, or other separation transaction. Pinnacle Harbor contends that the interactive gaming division is undervalued within the Company's current corporate structure and that a separation would unlock significant shareholder value.
Demand 3 — Capital Return. Pinnacle Harbor demands that the Company return $300 million to shareholders through either a special dividend or an accelerated share repurchase program. Pinnacle Harbor argues that the Company's balance sheet supports a meaningful capital return and that management's current capital allocation strategy underweights shareholder returns relative to peers in the gaming and leisure sector.
B. Current Stock Price and Market Capitalization Context
The Company's common stock trades on the Nasdaq Global Select Market under the ticker symbol "RGC." The following table summarizes key market data as of the relevant dates in the activist timeline:
As of the engagement opening date of November 15, 2022, the Company had 104,700,000 shares of common stock outstanding, yielding a market capitalization of approximately $3.14 billion at the $30.00 per share reference price. The Company currently pays a quarterly dividend yielding approximately 1.8% on an annualized basis. The Company's net debt as of the most recently reported quarter stands at approximately $1.62 billion. Fiscal year 2021 revenue was $2.87 billion, and fiscal year 2022 revenue is projected at approximately $3.05 billion, reflecting year-over-year growth of approximately 6.3%. The interactive gaming division contributed revenue of $412 million in fiscal year 2021, representing approximately 14.4% of total consolidated revenue.
C. Board Composition and Special Committee
The Board of Directors of RGC currently consists of nine directors, seven of whom are independent under Nasdaq listing standards. The two management directors are Gerald R. Whitmore, Chief Executive Officer, and Raymond Choi, Chief Financial Officer. The Board is chaired by Diane K. Sheridan, who qualifies as independent and who has served as Board Chair since September 2019. The Board maintains standing committees for Audit, Compensation, and Nominating & Corporate Governance, each composed entirely of independent directors.
Upon receipt of the preliminary Schedule 13D filing by Pinnacle Harbor on November 10, 2022, the Board convened a special meeting on November 14, 2022, at which it resolved to form a Special Committee of independent directors to oversee the Company's response to the activist campaign. The Special Committee consists of James "Jim" Delacroix (Chair), Carmen Vasquez, and Randall Morse, each of whom is independent under Nasdaq listing standards and free of any material relationships with Pinnacle Harbor or its affiliates. The Special Committee was authorized to engage outside legal counsel, financial advisors, proxy solicitors, and such other advisors as it deemed necessary or appropriate in connection with its mandate. The Special Committee retained Calderwood & Harkness LLP as outside legal counsel effective November 15, 2022, and subsequently approved the retention of Whitfield Morrow Partners, Harlan Ridge Communications, and Calloway Pinnacle Trust Bank as described herein.
III. Shareholder Base Analysis
A thorough understanding of the Company's shareholder base is the foundation of any effective engagement strategy. This section identifies the Company's major institutional holders, assesses their investment styles and likely disposition in a contested or uncontested vote, and provides a combined ownership snapshot to frame the vote arithmetic that will govern the outcome of any proxy contest.
A. Major Institutional Holders
1. Ridgeway Asset Management, LP
Ownership: 8,585,400 shares (8.2% of shares outstanding)
Profile: Ridgeway Asset Management, LP is a long-only value-oriented investment fund headquartered in Boston, Massachusetts. The fund was founded in 2002 and manages approximately $7.8 billion in assets, with a focus on mid-cap and large-cap equities in the consumer, gaming, and industrial sectors. Ridgeway is RGC's single largest institutional shareholder, exceeding Pinnacle Harbor's 6.8% position by a meaningful margin.
Key Contact: Franklin Osei, Portfolio Manager. Mr. Osei has been the lead portfolio manager on Ridgeway's RGC position since the fund first acquired shares in 2017. He has attended RGC's annual meetings in each of the past three years and has met with management on multiple occasions during the Company's investor day events. Ridgeway has historically voted in favor of management's recommended slate and proposals.
Investment Style and Likely Disposition: Ridgeway is a long-term holder that values consistent operational execution, dividend stability, and capital discipline. The fund has a moderate sensitivity to governance issues but is not typically receptive to activist-driven demands that it perceives as short-term in orientation. We assess Ridgeway as generally supportive of incumbent management provided that the Company can demonstrate a credible strategic plan and continued execution against financial targets. Ridgeway is likely to engage substantively with the Company's presentation of its interactive gaming strategy and capital allocation framework.
Strategic Importance: As the single largest holder of RGC common stock — exceeding Pinnacle Harbor's 6.8% position — Ridgeway's public or private support is critical to the success of the Company's defense. If Ridgeway can be secured as a management ally, its 8.2% stake, combined with other management-aligned institutional holders and insider ownership, would provide a substantial block in any contested vote. The loss of Ridgeway's support, conversely, would significantly alter the vote arithmetic in Pinnacle Harbor's favor. We recommend that the engagement with Ridgeway be the highest-priority item in the Phase 2 outreach plan and that Board Chair Sheridan and CEO Whitmore meet with Franklin Osei in person in Boston at the earliest available opportunity in January 2023.
2. Stillwater Capital Advisors, LLC
Ownership: 5,653,800 shares (5.4% of shares outstanding)
Profile: Stillwater Capital Advisors, LLC is a growth-oriented registered investment advisor headquartered in Chicago, Illinois. The firm manages approximately $5.4 billion in assets across a range of growth-equity and GARP (growth-at-a-reasonable-price) strategies. Stillwater has held a position in RGC since early 2020 and has incrementally increased its stake over the past two years, reflecting a constructive view on the Company's growth trajectory, particularly in the interactive gaming segment.
Key Contact: Margaret "Meg" Liu, Head of Governance. Ms. Liu oversees Stillwater's proxy voting and shareholder engagement activities and is known within the institutional investor community for her rigorous, governance-focused approach to contested elections. She maintains active relationships with the proxy advisory firms Centurion Governance Services, Inc. ("Centurion") and Hartley Shareholder Advisory Group, LLC ("Hartley"), and is known to give significant weight to their recommendations in contested situations.
Investment Style and Likely Disposition: Stillwater's growth orientation means that the fund may be sympathetic to arguments about unlocking value in the interactive gaming segment, which could create a point of alignment with Pinnacle Harbor's Demand 2 (strategic review). At the same time, Stillwater is a governance-conscious institution that will evaluate the quality of the Board's composition, the credibility of management's strategic plan, and the track record of capital allocation before deciding how to vote. Stillwater will closely monitor the proxy advisory firm recommendations issued by Centurion and Hartley. If either advisory firm recommends in favor of Pinnacle Harbor's nominees, Stillwater's support for management becomes significantly less certain.
Strategic Importance: Stillwater is the quintessential "swing holder" in this contest. Its 5.4% stake is large enough to be outcome-determinative in a closely contested vote. Proactive and substantive engagement with Meg Liu is essential to prevent Stillwater from aligning with Pinnacle Harbor. The engagement should focus on the Company's governance enhancements, board refreshment efforts, and the Board's own proactive consideration of strategic alternatives for the interactive gaming division. We recommend that the meeting with Stillwater include at least one independent director who can speak credibly to governance and board oversight practices, in addition to CEO Whitmore and, if appropriate, CFO Choi to address capital allocation.
3. Canfield Municipal Employees' Retirement System
Ownership: 2,198,700 shares (2.1% of shares outstanding)
Profile: Canfield Municipal Employees' Retirement System ("Canfield MERS") is a public pension fund headquartered in Canfield, Ohio. The fund serves the retirement needs of approximately 18,000 active and retired municipal employees. Canfield MERS has held a position in RGC since 2019 and is managed by a combination of internal staff and external investment managers.
Key Contact: David Proulx, Chief Investment Officer. Mr. Proulx is responsible for overseeing the fund's investment portfolio, including proxy voting on equity holdings. Canfield MERS follows a formal proxy voting policy that gives significant weight to proxy advisory firm recommendations but also allows for independent judgment when the fund's internal staff concludes that a departure is warranted.
Investment Style and Likely Disposition: Canfield MERS is a conservative, long-term investor that prioritizes stable value creation, dividend income, and adherence to corporate governance best practices. As a public pension fund, Canfield MERS is less likely to support an activist campaign unless there are clear governance deficiencies at the target company. The fund's voting record reflects a pattern of support for incumbent management slates at portfolio companies where governance practices are deemed satisfactory. However, Canfield MERS is also known to be responsive to proxy advisory firm recommendations, and an adverse recommendation from Centurion or Hartley could influence the fund's decision.
Strategic Importance: While Canfield MERS's 2.1% stake is smaller than the positions held by Ridgeway and Stillwater, public pension funds carry reputational weight and influence in the institutional investor community. A public or private indication of support from Canfield MERS would reinforce the narrative that the Company's governance practices and strategic direction enjoy broad-based institutional confidence. We recommend a phone call or video meeting with David Proulx in January 2023, with a focus on the Company's long-term value creation strategy, dividend sustainability, and governance enhancements.
4. Other Known Institutional and Retail Holdings
Beyond the three institutional holders profiled above, the Company's shareholder base includes a significant number of additional institutional holders, passive index funds, and retail investors. The precise composition of the remaining float requires updated beneficial ownership data, which we have requested from the Company's transfer agent, Continental Share Services, Inc., through Vice President Jason Velmoran. Specifically, we have requested an updated DTC participant list and a NOBO/OBO breakdown (non-objecting beneficial owner / objecting beneficial owner), which will enable Whitfield Morrow to conduct a comprehensive shareholder identification and segmentation analysis.
Preliminary estimates, based on the Company's most recent SEC filings and publicly available 13F data, suggest that passive and index fund holders (including funds managed by major index fund families) account for approximately 25–30% of shares outstanding. These holders will vote in accordance with their respective stewardship and proxy voting guidelines, which vary by firm but generally reflect a governance-focused approach. The remaining float is distributed among smaller institutional holders and retail investors. Retail ownership is estimated to account for approximately 15–20% of shares outstanding, and retail shareholders historically exhibit lower participation rates in contested elections but can be mobilized through targeted telephone and digital solicitation campaigns conducted by Whitfield Morrow.
We anticipate that the shareholder identification analysis to be completed by Whitfield Morrow in Phase 1 will provide a significantly more granular view of the Company's ownership profile, including identification of additional top-20 holders that should be prioritized for direct engagement.
B. Combined Ownership Snapshot Table
The following table summarizes known and estimated ownership positions as of December 2022:
Vote Math Analysis. In a plurality voting system, which governs contested director elections under RGC's Amended and Restated Bylaws, the nominees who receive the greatest number of votes cast will be elected to the available Board seats. Under the SEC's universal proxy card rules (Rule 14a-19, effective September 1, 2022), both the Company and Pinnacle Harbor will be required to list all nominees on a single proxy card, enabling shareholders to mix and match nominees from both slates. This dynamic makes individual director-level support — rather than slate-level support — the critical variable.
The combined holdings of Ridgeway Asset Management (8.2%), Stillwater Capital Advisors (5.4%), and Canfield MERS (2.1%) represent 16,437,900 shares, or approximately 15.7% of outstanding shares. When combined with estimated management and insider holdings of approximately 2.4%, these holders represent approximately 18.1% of shares outstanding. Securing the support of all three institutions, together with management-aligned votes and a reasonable proportion of remaining institutional and retail votes, would provide a strong foundation for prevailing in a contested election. Conversely, if Pinnacle Harbor secures the support of Stillwater (5.4%) and a meaningful portion of index fund and retail votes, the contest becomes significantly more competitive, underscoring the urgency of early and proactive engagement with swing holders.
IV. Advisor Team and Coordination Framework
The Company has assembled a team of experienced advisors to support the Board and Special Committee in responding to the activist campaign. Effective coordination among these advisors, under Calderwood & Harkness's direction, is essential to ensuring a unified and consistent approach to shareholder engagement, messaging, and, if necessary, proxy solicitation. This section outlines the role, key deliverables, and contact information for each advisor, as well as the coordination protocol that will govern the working relationship among the team.
A. Proxy Solicitor — Whitfield Morrow Partners, LLC
Lead Contact: Denise Cavanaugh, Senior Vice President
Office: 501 Madison Avenue, 14th Floor, New York, New York 10022
Role and Responsibilities: Whitfield Morrow Partners, LLC is retained to manage the Company's shareholder solicitation process throughout the duration of the activist campaign. Whitfield Morrow's responsibilities include: obtaining and analyzing beneficial ownership data from the Company's transfer agent and DTC participants; conducting detailed shareholder identification and segmentation analysis by investment style, voting history, and governance orientation; building and maintaining a vote projection model for both contested and uncontested scenarios; leading telephone and digital solicitation campaigns targeting institutional and retail shareholders; and managing vote tabulation efforts during the proxy solicitation window. Whitfield Morrow has extensive experience in contested proxy solicitations in the gaming and consumer sectors and is well-positioned to provide strategic counsel on shareholder dynamics throughout the engagement.
Immediate Deliverables Requested:
(1) An updated beneficial ownership report based on the most recent DTC participant list and NOBO/OBO data obtained from Continental Share Services, Inc.;
(2) A shareholder segmentation analysis categorizing holders by investment style (value, growth, index/passive, activist, hedge fund, retail) and assessing their likely disposition in a contested election; and
(3) A preliminary vote projection model for both contested and uncontested scenarios, incorporating assumptions regarding voter turnout, proxy advisory firm recommendations, and holder disposition.
B. Investor Relations Advisor — Harlan Ridge Communications, LLC
Lead Contact: Philip Navarette, Partner
Office: 712 Fifth Avenue, Suite 900, New York, New York 10019
Role and Responsibilities: Harlan Ridge Communications, LLC is retained to develop and execute the Company's messaging and communications strategy in connection with the activist campaign. Harlan Ridge's responsibilities include: developing a comprehensive messaging framework and frequently asked questions document for use by Company spokespersons in shareholder meetings; preparing an updated investor presentation deck that highlights the Company's strategic plan, the value proposition of the interactive gaming division, and the Board's governance credentials; coordinating media relations, including monitoring press coverage, managing inquiries from financial journalists, and preparing the Company's public response to Pinnacle Harbor's open letter and any subsequent public communications; assisting in the drafting of shareholder correspondence, including letters to shareholders that may accompany proxy materials; and advising on the tone, timing, and sequencing of all public and private communications related to the campaign.
Immediate Deliverables Requested:
(1) A key messaging framework and Q&A document for use by Board Chair Sheridan, CEO Whitmore, and other approved spokespersons in shareholder meetings, to be reviewed by Calderwood & Harkness for Regulation FD compliance prior to distribution;
(2) An updated investor presentation deck highlighting the Company's strategic plan, the interactive gaming division's growth trajectory and value proposition, capital allocation track record, and corporate governance profile; and
(3) A media monitoring and response protocol, including procedures for tracking media coverage, responding to press inquiries, and issuing proactive press releases or statements.
C. Financial Advisor — Calloway Pinnacle Trust Bank
Lead Contact: Thomas V. Ashford, Managing Director, Activism & Corporate Defense
Office: 200 Park Avenue, 28th Floor, New York, New York 10166
Role and Responsibilities: Calloway Pinnacle Trust Bank is retained to provide financial analysis supporting management's strategic position and to participate in key institutional investor meetings to present the financial case for the Company's current strategy and governance. Calloway Wainwright's responsibilities include: preparing a sum-of-the-parts valuation of RGC, with a particular focus on the interactive gaming division, to demonstrate the Company's full value within its current corporate structure; analyzing capital return alternatives, including the feasibility and shareholder implications of Pinnacle Harbor's $300 million capital return demand in light of the Company's net debt position and growth investment needs; preparing peer benchmarking analyses on governance, board composition, capital allocation, and shareholder returns; and participating in meetings with key institutional holders alongside Company management and independent directors to present financial data and respond to investor questions.
Immediate Deliverables Requested:
(1) A preliminary sum-of-the-parts analysis of RGC, including a standalone valuation of the interactive gaming division and a comparison to publicly traded interactive gaming peers;
(2) A capital allocation and shareholder return analysis comparing RGC's current return profile (including the 1.8% dividend yield and existing share repurchase program) to peers and evaluating the financial impact of various capital return scenarios, including Pinnacle Harbor's $300 million demand; and
(3) A peer benchmarking study on governance and board composition, comparing RGC's board structure, committee composition, director qualifications, and governance practices to those of comparable public gaming and leisure companies.
D. Coordination Protocol
Effective coordination among the Company's advisors is essential to the success of the shareholder engagement strategy. To ensure consistent messaging, avoid duplication of effort, and preserve applicable privileges, we have established the following coordination protocol:
Weekly Coordination Calls. Calderwood & Harkness will convene weekly coordination calls with all advisors, including Whitfield Morrow (Cavanaugh), Harlan Ridge (Navarette), and Calloway Wainwright (Ashford). Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of RGC, will participate in each call to ensure alignment between the advisor team and Company management. These calls will be scheduled for Wednesday mornings at 9:00 a.m. Eastern Time, beginning January 4, 2023, and will continue on a weekly cadence until the activist campaign is resolved. The calls will follow a standing agenda that includes: (i) status update from each advisor; (ii) review of shareholder engagement activity since the prior call; (iii) review of media coverage and Pinnacle Harbor activity; (iv) discussion of upcoming milestones and deliverables; and (v) identification of issues requiring Special Committee attention.
Shared Privileged Workstream Tracker. Calderwood & Harkness will maintain a shared workstream tracker that documents all ongoing work streams, deliverables, deadlines, and responsibilities across the advisor team. All communications among advisors related to the activist campaign should be routed through Calderwood & Harkness or should include Calderwood & Harkness counsel on the communication, in order to preserve the attorney-client privilege and work product protection that applies to legal advice rendered in connection with the campaign. Advisors are instructed to mark all written communications related to the activist campaign as "PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE — ATTORNEY WORK PRODUCT" and to refrain from sharing such communications with any third party without the prior approval of Calderwood & Harkness.
Reporting to Special Committee. Calderwood & Harkness will provide the Special Committee with bi-weekly written updates summarizing the status of the shareholder engagement strategy, including shareholder feedback, vote projections, advisor deliverables, and any material developments. In addition, Calderwood & Harkness will provide ad hoc updates to the Special Committee on any material development that warrants immediate attention, including the receipt of Pinnacle Harbor's formal nomination notice, any public communications by Pinnacle Harbor, any contact from proxy advisory firms, and any significant shift in shareholder sentiment.
V. Recommended Outreach Timeline and Phases
The shareholder engagement strategy is organized into four phases, each with defined objectives, activities, and timelines. The phases are designed to be sequential but overlapping, with earlier phases informing and enabling subsequent phases. We note at the outset that Phase 4 (Active Solicitation) would only be triggered if the activist campaign proceeds to a full proxy contest, and that the ultimate objective is to resolve the situation through negotiated settlement (Phase 1 and Phase 2 outcomes) or, failing that, to prevail in a contested vote. As discussed in Section X below, the campaign was ultimately resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, and Phases 3 and 4 were not fully executed.
Phase 1: Intelligence Gathering and Preparation (Late December 2022 – Early January 2023)
The first phase of the engagement strategy focuses on assembling the information and materials necessary to support effective shareholder outreach. Specific activities in this phase include:
Shareholder Identification. Whitfield Morrow Partners will obtain an updated shareholder list from the Company's transfer agent, Continental Share Services, Inc. (Jason Velmoran, Vice President). The request will include the most recent DTC participant list and a NOBO/OBO breakdown, which will identify both non-objecting beneficial owners (who may be contacted directly) and objecting beneficial owners (who may be contacted only through their intermediary broker-dealers). This data will form the basis for Whitfield Morrow's shareholder identification and segmentation analysis, which will categorize holders by investment style, geographic location, estimated holding period, and likely disposition in a contested election.
Messaging and Materials Development. Harlan Ridge Communications will finalize the messaging framework and investor materials described in Section IV.B above. All materials will be submitted to Calderwood & Harkness for review prior to use, to ensure compliance with Regulation FD and consistency with the Company's overall communications strategy.
Financial Analysis. Calloway Pinnacle Trust Bank will deliver its preliminary sum-of-the-parts analysis, capital allocation analysis, and peer benchmarking study as described in Section IV.C above. These analyses will inform the key messages and talking points used in shareholder meetings and will provide the financial foundation for the Company's response to Pinnacle Harbor's demands.
Legal Analysis. Calderwood & Harkness will complete its analysis of the compliance of Pinnacle Harbor's nomination notice with the Advance Notice Provision of the Company's Amended and Restated Bylaws. A preliminary compliance analysis was delivered to the Special Committee on December 14, 2022. The nominee qualification and deficiency review is targeted for completion by January 13, 2023, two days after the close of the advance-notice window on January 11, 2023, to allow for evaluation of any supplemental information provided by Pinnacle Harbor within the window.
Spokesperson Preparation. Board Chair Diane Sheridan and CEO Gerald Whitmore will participate in preparation sessions, including mock question-and-answer exercises, to ensure that they are fully prepared for shareholder meetings. These sessions will be facilitated by Harlan Ridge and Calderwood & Harkness and will cover the full range of topics likely to arise in institutional investor meetings, including the Company's strategic plan, the interactive gaming division, capital allocation, Pinnacle Harbor's specific demands, and governance practices. CFO Raymond Choi will also participate in preparation sessions to the extent that financial data and capital allocation topics will be addressed in shareholder meetings.
Phase 2: Proactive Institutional Outreach (January 2023)
The second phase of the engagement strategy involves direct, proactive outreach to the Company's largest and most strategically important institutional shareholders. The objective of this phase is to present the Company's strategic plan, address shareholder questions and concerns, and build a foundation of institutional support that can be relied upon in a contested or uncontested vote.
Outreach during this phase will be led by Board Chair Sheridan, CEO Whitmore, and/or independent directors as appropriate for each specific engagement, with support from Harlan Ridge and Calloway Wainwright. The priority targets and recommended engagement formats are as follows:
Ridgeway Asset Management, LP (Franklin Osei, Portfolio Manager). We recommend an in-person meeting in Boston at Ridgeway's offices at the earliest available date in the week of January 8, 2023. The meeting should be attended by Board Chair Sheridan and CEO Whitmore, with Philip Navarette (Harlan Ridge) and Thomas Ashford (Calloway Wainwright) in support. The meeting should present the Company's strategic plan with particular emphasis on the interactive gaming division's growth trajectory, revenue and margin targets, and management's vision for the division within the broader RGC portfolio. The capital allocation framework should also be presented, including the rationale for current dividend levels and share repurchase activity.
Stillwater Capital Advisors, LLC (Meg Liu, Head of Governance). We recommend an in-person meeting in Chicago or, if scheduling does not permit an in-person meeting in the Phase 2 timeframe, a video conference meeting. Given Ms. Liu's governance focus, the meeting should be attended by Board Chair Sheridan and at least one independent director who can speak to the Board's governance practices, committee structure, and board refreshment efforts. CEO Whitmore should also attend to address strategic questions. The meeting should proactively address the strategic review question — acknowledging that the Board and management continuously evaluate strategic alternatives for all business segments and presenting the Board's own assessment of the interactive gaming division — without committing to any specific process or outcome. Governance enhancements should be highlighted, including any board refreshment or succession planning activities.
Canfield Municipal Employees' Retirement System (David Proulx, Chief Investment Officer). We recommend a phone call or video meeting with Mr. Proulx. Given the fund's conservative orientation and emphasis on long-term value and dividend income, the meeting should focus on the Company's long-term value creation strategy, the sustainability and growth potential of the current dividend, and the Board's governance credentials. Board Chair Sheridan should lead the engagement, with CEO Whitmore available to address financial and strategic questions.
In addition to these priority engagements, secondary outreach should be conducted with additional top-20 holders as identified through Whitfield Morrow's shareholder identification analysis. Whitfield Morrow will provide a prioritized target list with recommended engagement formats (in-person, video, telephone) based on holder size, disposition, and strategic importance.
All engagements must be logged in the advisor team's shared workstream tracker, and detailed records of each engagement — including date, attendees, topics discussed, shareholder questions, and shareholder feedback — must be maintained and shared with Calderwood & Harkness for inclusion in the bi-weekly Special Committee update. As noted below in Section VII, all outreach must be conducted in strict compliance with Regulation FD, and no material non-public information may be disclosed during investor conversations.
Phase 3: Proxy Advisory Firm Engagement (January – February 2023, if Contest Materializes)
If the activist campaign proceeds to a formal proxy contest — that is, if Pinnacle Harbor files a preliminary proxy statement with the SEC and begins soliciting proxies from RGC shareholders — the Company will need to engage proactively with the two principal proxy advisory firms, Centurion Governance Services, Inc. ("Centurion") and Hartley Shareholder Advisory Group, LLC ("Hartley"). The recommendations issued by these firms are closely followed by many institutional investors, including Stillwater Capital Advisors and Canfield MERS, and can have a significant impact on the outcome of a contested election.
We anticipate that Pinnacle Harbor may file a preliminary proxy statement in late January or February 2023 if settlement discussions do not progress. We note, for the Special Committee's information, that Pinnacle Harbor prepared a draft preliminary proxy statement and circulated it internally to its counsel, Hargrove Sloane & Birch LLP, on or about February 9, 2023, but as of the date of this memorandum's most recent update, Pinnacle Harbor has not filed the document with the SEC.
In the event that a proxy contest materializes, the Company's submissions to Centurion and Hartley should include:
(1) A detailed rebuttal to each of Pinnacle Harbor's three demands, supported by financial analysis from Calloway Wainwright and governance data;
(2) A comprehensive board skills matrix demonstrating the existing competencies represented on the RGC Board, including industry expertise, financial acumen, technology and digital strategy experience, and operational leadership;
(3) An overview of the Company's interactive gaming strategy, including growth targets, competitive positioning, and management's rationale for maintaining the division within the RGC portfolio;
(4) The Company's capital allocation track record, including historical returns to shareholders through dividends and share repurchases, and a comparison to peer companies;
(5) A summary of corporate governance enhancements implemented or planned by the Board, including any board refreshment activities, bylaw amendments, or governance policy updates.
Calderwood & Harkness and Harlan Ridge will coordinate the preparation of the proxy advisory firm submissions, with financial analysis contributed by Calloway Wainwright. Meetings with proxy advisory firm analysts should be scheduled as soon as possible following the filing of proxy materials by either party, and should include Board Chair Sheridan, CEO Whitmore, and at least one additional independent director.
We note that the proxy advisory firm recommendations were never finalized in the RGC/Pinnacle Harbor matter, as the campaign was resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, prior to the firms' issuance of reports. Nevertheless, the Company should remain prepared to engage with Centurion and Hartley throughout the advance-notice and proxy solicitation period, as a reversal of settlement discussions or an escalation by Pinnacle Harbor could reactivate the need for proxy advisory firm engagement at any time.
Phase 4: Active Solicitation (If Proxy Contest Proceeds — February – May 2023)
If settlement efforts are unsuccessful and the proxy contest proceeds to a shareholder vote at the Company's 2023 annual meeting of stockholders, Whitfield Morrow Partners will execute a full proxy solicitation campaign. This phase represents the maximum level of advisor mobilization and shareholder engagement and would involve the following activities:
Solicitation Campaign. Whitfield Morrow will conduct a comprehensive proxy solicitation campaign using telephone, mail, and digital channels. The campaign will target both institutional and retail shareholders, with tailored messaging and outreach strategies for each segment. Institutional holders will be contacted by senior Whitfield Morrow professionals, with key holders receiving direct outreach from Board Chair Sheridan, CEO Whitmore, and independent directors. Retail shareholders will be contacted through automated and live telephone solicitation, direct mail, and digital communications (email and online platforms).
Record Date and Solicitation Window. The Board is expected to set the record date for the 2023 annual meeting in approximately March or April 2023, with the annual meeting anticipated to be held in May 2023. The proxy solicitation window — the period during which the Company and Pinnacle Harbor may solicit proxies from shareholders — will begin upon the filing and distribution of definitive proxy materials and will continue through the date of the annual meeting.
Universal Proxy Card Considerations. The SEC's universal proxy card rules under Rule 14a-19, which became effective on September 1, 2022, will apply to any contested election at the 2023 annual meeting. Under these rules, both the Company and Pinnacle Harbor will be required to include all director nominees (from both slates) on a single universal proxy card, enabling shareholders to vote for any combination of Company and Pinnacle Harbor nominees up to the number of available Board seats. This rule change fundamentally alters the dynamics of proxy contests by eliminating the historical advantage enjoyed by the side that solicited a shareholder's proxy card first. Under the universal proxy card regime, individual director-level support becomes the critical variable, and the Company must be prepared to make a compelling case for each of its nominated directors on a director-by-director basis.
Vote Tracking and Reporting. During the solicitation window, Whitfield Morrow will provide daily vote tallies to Calderwood & Harkness and RGC General Counsel Nakamura, reflecting the number of shares voted in favor of the Company's slate, Pinnacle Harbor's nominees, and any withheld or abstained shares. These tallies will be reported to the Special Committee in real time and will inform decisions regarding the escalation of outreach efforts to uncommitted holders.
Escalation. If vote tallies indicate that the Company is at risk of losing one or more Board seats, the advisor team will escalate outreach efforts to uncommitted and undecided holders, including additional telephone solicitation, targeted correspondence from Board Chair Sheridan, and direct engagement by independent directors. The Special Committee will be consulted on all escalation decisions.
We note, for the Special Committee's information, that Phase 4 was not reached in the RGC/Pinnacle Harbor matter. The activist campaign was resolved through a Cooperation and Standstill Agreement executed on March 10, 2023, as discussed in Section X below.
VI. Key Messaging and Talking Points
The following messaging framework has been developed in consultation with Harlan Ridge Communications and is designed to provide a consistent, fact-based narrative for use in shareholder meetings, public communications, and proxy advisory firm submissions. All talking points are subject to Regulation FD review by Calderwood & Harkness prior to use and should not be supplemented or modified without prior consultation with outside counsel. A more detailed set of talking points and a comprehensive Q&A document will be included in Appendix C to this memorandum, marked "DRAFT — Subject to Reg FD Review by Calderwood & Harkness."
A. Strategic Direction and Value Creation
The Company's strategic direction is producing strong and consistent results. Fiscal year 2021 revenue was $2.87 billion, and fiscal year 2022 revenue is projected at approximately $3.05 billion, representing year-over-year growth of approximately 6.3%. This growth reflects the execution of a balanced strategy that combines stable cash flows from the Company's established resort and casino operations with accelerating growth in the interactive gaming division.
The interactive gaming division is a key growth engine for the Company. The division generated revenue of $412 million in fiscal year 2021, representing approximately 14.4% of total consolidated revenue, and is expected to increase its revenue contribution as management invests in digital platform expansion, customer acquisition, and new market entry. Management has a clear and well-articulated plan to accelerate the growth of the interactive gaming division while preserving the integrated benefits of the division's relationship with the Company's physical gaming and resort operations.
The Company's stock price has appreciated meaningfully in recent months, rising from $24.18 per share on June 1, 2022 to $31.74 per share on November 30, 2022 — an increase of approximately 31% — reflecting the market's recognition of the Company's value creation trajectory. This appreciation predates Pinnacle Harbor's public activism and is attributable to the Company's operational execution and strategic positioning.
The Company's net debt of $1.62 billion is manageable relative to its revenue base and cash flow generation, and the Company maintains investment-grade credit quality and access to diversified sources of capital. The balance sheet supports both continued strategic investment and an ongoing commitment to shareholder returns.
B. Board Quality and Governance
The RGC Board of Directors is a well-constituted, highly qualified, and independent board that provides effective oversight of the Company's strategy and operations. The Board comprises nine directors, seven of whom are independent under Nasdaq listing standards, reflecting a significant supermajority of independent directors. The Board is chaired by Diane K. Sheridan, an independent director, ensuring robust separation of the Board Chair and CEO roles and providing independent leadership of Board activities.
The Board maintains a strong committee structure, with three standing committees — Audit, Compensation, and Nominating & Corporate Governance — each composed entirely of independent directors. The Board's members bring a diverse range of relevant experience and expertise, including deep knowledge of the gaming industry, financial and capital markets expertise, technology and digital strategy experience, and operational leadership in complex, regulated businesses.
The Company's corporate governance practices reflect best-in-class standards. Recent bylaw amendments adopted on September 12, 2021 incorporated governance best practices including enhanced proxy access provisions, majority voting in uncontested director elections, and updated advance-notice requirements. The Board is committed to ongoing refreshment and succession planning, and actively evaluates its composition and the skills, experience, and diversity of its members on a regular basis.
C. Response to Pinnacle Harbor's Specific Demands
Two Board Seats. The Board acknowledges Pinnacle Harbor's right to nominate directors through the Company's advance-notice process and takes seriously the perspectives of all shareholders. However, the Board believes that it is already well-constituted with the relevant expertise necessary to oversee the Company's strategy and operations, including the interactive gaming division. The Board notes that Pinnacle Harbor's nominees may present complications under applicable gaming regulatory licensing requirements, as each director of a publicly traded gaming company is typically required to obtain gaming licenses in multiple jurisdictions in which the Company operates. The Board is also evaluating whether Pinnacle Harbor's nominees meet the independence standards required under Nasdaq listing rules, given their prior professional relationships with Pinnacle Harbor's advisory network. The Board remains open to considering highly qualified director candidates through its established Nominating & Corporate Governance Committee processes.
Strategic Review of Interactive Gaming. The Board and management continuously evaluate strategic alternatives for all of the Company's business segments, including the interactive gaming division. This is a core responsibility of the Board and does not require external direction from a 6.8% shareholder. An externally mandated strategic review, conducted under the pressure of an activist campaign and with a predetermined focus on separation, is premature and risks destroying value by signaling to the market, competitors, and employees that the Company is open to a transaction that may not be in the best interests of all shareholders. The Board will continue to evaluate all strategic alternatives in the ordinary course and will act when and if it determines that doing so would be in the best interests of the Company and all of its shareholders.
$300 Million Capital Return. RGC maintains a disciplined capital allocation strategy that balances shareholder returns with growth investment and balance sheet management. The Company's current annualized dividend yield of approximately 1.8% reflects its commitment to returning capital to shareholders, and the Company has an active share repurchase program. Pinnacle Harbor's demand for a $300 million special dividend or accelerated buyback must be evaluated in light of the Company's existing net debt of $1.62 billion, its growth investment needs — particularly in the interactive gaming division — and the potential impact on the Company's credit profile and financial flexibility. The Board will continue to evaluate capital return alternatives as part of its ongoing capital allocation process.
D. Pinnacle Harbor's Short-Term Orientation
Pinnacle Harbor accumulated its entire position in RGC common stock between June and November 2022, a period of approximately five months. This relatively short holding period contrasts sharply with the long-term investment horizons of the Company's core institutional shareholders, including Ridgeway Asset Management (holding since 2017), Stillwater Capital Advisors (holding since 2020), and Canfield MERS (holding since 2019). Pinnacle Harbor's weighted-average purchase price of $26.42 per share, compared to the current market price of approximately $31 per share, suggests that the fund is already sitting on meaningful unrealized gains and may be motivated to pursue short-term value-realization strategies that do not align with the interests of long-term holders.
Pinnacle Harbor's event-driven activist strategy, which focuses on agitating for specific corporate actions over relatively short time horizons, is fundamentally different from the long-term, buy-and-hold investment strategies employed by the majority of RGC's institutional shareholder base. The $300 million capital return demand, in particular, appears designed to generate near-term returns for Pinnacle Harbor's fund while potentially constraining the Company's strategic flexibility and financial capacity to invest in long-term growth initiatives, including the interactive gaming division that Pinnacle Harbor itself identifies as undervalued.
VII. Regulation FD Compliance Protocol
Compliance with Regulation FD (17 C.F.R. § 243.100 et seq.) is of paramount importance in all shareholder engagement activities. Regulation FD prohibits a public company from selectively disclosing material non-public information to certain categories of market participants — including institutional investors and analysts — unless the information is simultaneously disclosed to the public. Violations of Regulation FD can result in SEC enforcement actions and significant reputational harm. The Company's shareholder outreach activities must therefore be conducted within a rigorous compliance framework.
The following protocol will govern all shareholder communications in connection with the activist campaign:
Pre-Clearance of Materials. All talking points, scripts, investor presentations, Q&A documents, shareholder correspondence, and other materials to be used in or distributed during shareholder meetings must be reviewed and approved by Calderwood & Harkness prior to use. This review will focus on identifying any statements that could constitute the disclosure of material non-public information and ensuring that all materials are consistent with the Company's public disclosures.
Approved Spokespersons. Participants in shareholder meetings will be limited to the following approved spokespersons: Board Chair Diane K. Sheridan; CEO Gerald R. Whitmore; CFO Raymond Choi (for financial data and capital allocation topics); and General Counsel Patricia "Trish" Nakamura (for governance matters and legal compliance). Advisors from Harlan Ridge Communications, Calloway Pinnacle Trust Bank, and Calderwood & Harkness may participate in shareholder meetings in a support capacity but should not independently address shareholders on substantive topics without coordination with the approved spokespersons.
Prohibition on Selective Disclosure. No approved spokesperson or advisor may disclose material non-public information to any shareholder, analyst, proxy advisory firm representative, or other market participant during the course of shareholder engagement activities. Information that may be discussed in shareholder meetings is limited to: (i) information that has been publicly disclosed by the Company in its SEC filings, press releases, investor presentations, and other public communications; (ii) the Company's publicly articulated strategic plan and capital allocation framework; (iii) the Company's publicly available corporate governance policies and practices; and (iv) the Company's response to Pinnacle Harbor's public demands, as set forth in the approved talking points.
Engagement Records. Detailed records of each shareholder engagement must be maintained, including: the date and time of the engagement; the names and titles of all attendees (both Company-side and shareholder-side); the format of the engagement (in-person, video, telephone); the topics discussed; any questions posed by the shareholder; the Company's responses; and any feedback or indications of sentiment provided by the shareholder. These records will be maintained by Calderwood & Harkness and included in the bi-weekly Special Committee updates.
Inadvertent Disclosure Protocol. In the event that material non-public information is inadvertently disclosed during a shareholder engagement, the following escalation protocol will apply:
(a) The approved spokesperson who made or became aware of the inadvertent disclosure must immediately notify Calderwood & Harkness (Douglas Fairchild or Claire Dempsey) and General Counsel Nakamura;
(b) Calderwood & Harkness will assess whether the disclosed information constitutes material non-public information within the meaning of Regulation FD;
(c) If Calderwood & Harkness determines that the disclosure constitutes a Regulation FD event, the Company will file a Form 8-K with the SEC disclosing the information to the public as promptly as practicable, and in no event later than the end of the next business day following the determination; and
(d) Calderwood & Harkness and General Counsel Nakamura will evaluate whether any additional remedial measures are necessary, including issuance of a press release or supplemental public disclosure.
All approved spokespersons and advisors will be briefed on this protocol prior to the commencement of Phase 2 shareholder outreach.
VIII. Coordination with D&O Insurance and Indemnification
The activist campaign gives rise to potential liability exposures for the Company's directors and officers, and it is important that directors participating in shareholder outreach activities be aware of the protections available to them under the Company's directors' and officers' liability insurance program and indemnification provisions.
Notice to D&O Carriers. A notice of circumstances was submitted to the Company's D&O insurance carriers on November 16, 2022, two days after the formation of the Special Committee, through the Company's insurance broker, Glenmore Caulfield Insurance Brokers, Inc. (Sarah Voss, Senior Vice President). The notice described the Pinnacle Harbor activist campaign and the formation of the Special Committee, and preserved the Company's right to submit claims under the policy in the event that the campaign gives rise to covered losses.
Insurance Program Structure. The Company's D&O insurance program consists of the following layers:
The primary policy provides coverage for directors and officers for losses arising from claims made against them in their

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