Contract analysis

I. Executive Summary The purpose of this memorandum is to provide the Board of Directors of Redstone Gaming Corp. ("RGC" or the "Company") with a comprehensive analysis of whether the Board should adopt a limited-duration stockholder rights plan — commonly known as a "poison pill" — as a defensive measure in response to the activist board-seat campaign initiated by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harb

II. Background and Current Threat Assessment A. The Pinnacle Harbor Campaign Pinnacle Harbor Capital Partners, LP is a Delaware limited partnership whose general partner is Pinnacle Harbor Capital Management, LLC, also a Delaware limited liability company. Pinnacle Harbor is an event-driven activist hedge fund with approximately $4.2 billion in assets under management as of its most recently available disclosure. The

III. Overview of Stockholder Rights Plans Under Delaware Law A. Mechanics of a Rights Plan A stockholder rights plan, commonly referred to as a "poison pill," operates through the following general mechanism. The board of directors declares a dividend of one right for each outstanding share of common stock. Each right entitles the holder to purchase a fraction of a share of a newly created series of preferred stock (

IV. Proposed Rights Plan Parameters for RGC In order to inform the Board's deliberation, Calderwood & Harkness has analyzed the key parameters that would govern a stockholder rights plan tailored to the current Pinnacle Harbor situation. Set forth below are our recommendations regarding the trigger threshold, duration, exemptions, and redemption features of such a plan. These parameters reflect our assessment of the

V. Fiduciary Duty Considerations A. Unocal Analysis Applied to the Pinnacle Harbor Situation The adoption of a stockholder rights plan by the Board would be subject to enhanced scrutiny under the Unocal standard. The following analysis applies the two prongs of the Unocal test to the specific facts of the Pinnacle Harbor campaign. Prong 1 — Reasonably Perceived Threat Under the first prong of Unocal, the Board must i

VI. Proxy Advisory Firm Perspectives The Board's evaluation of a stockholder rights plan must account for the substantial influence that proxy advisory firms exercise over the voting decisions of institutional shareholders. The two most influential proxy advisory firms — Centurion Governance Services, Inc. and the Hartley Shareholder Advisory Group, LLC — have well-established policies regarding rights plans that are

VII. Strategic Risk Assessment A. Risks of Adoption The Board should carefully consider the following risks associated with adopting a stockholder rights plan at this time:

1. Proxy Advisory Backlash. As discussed in Section VI, adoption of a rights plan could trigger negative recommendations from Centurion Governance Services, Inc. and the Hartley Shareholder Advisory Group, LLC. Negative recommendations from one or both of these firms could cause the Board to lose votes at the 2023 annual meeting, potentially resulting in Pinnacle Harbor's nominees receiving sufficient support to gain

2. Institutional Investor Alienation. Key institutional holders — including Ridgeway Asset Management (8.2%), Stillwater Capital Advisors (5.4%), and the Canfield Municipal Employees' Retirement System (2.1%) — may view the adoption of a rights plan negatively, particularly if it is adopted without shareholder approval and in the context of an activist board-seat campaign rather than a hostile takeover. Institutional

3. Narrative Weaponization by Pinnacle Harbor. Pinnacle Harbor could frame the adoption of a rights plan as evidence that the Board is entrenched, defensive, and unwilling to engage constructively with its stockholders. This narrative is particularly powerful with governance-focused investors and with the financial media, and it could significantly enhance Pinnacle Harbor's ability to generate support for its proxy c

4. Litigation Risk. Pinnacle Harbor could challenge the rights plan in the Delaware Court of Chancery under the Unocal standard. While a well-structured, limited-duration plan with a reasonable trigger threshold has a reasonable probability of being upheld under existing Delaware precedent, litigation is expensive, distracting, and creates adverse publicity. Calderwood & Harkness estimates that defending a rights pla

5. Disproportionality Perception. A rights plan adopted against a 6.8% stockholder seeking only two board seats out of nine may be perceived — by the courts, by proxy advisory firms, by institutional shareholders, and by the financial media — as disproportionate to the threat. The disproportionality perception is the single most significant risk associated with adoption, as it goes directly to the legal standard gove

1. Creeping Accumulation. Without a rights plan in place, there is no structural barrier preventing Pinnacle Harbor from increasing its stake above its current 6.8%. Pinnacle Harbor could continue to accumulate shares through open-market purchases, potentially reaching 10%, 15%, or even higher levels. A larger stake would enhance Pinnacle Harbor's voting power, its credibility with other institutional shareholders, a

2. Wolf Pack Formation. Other activist or event-driven funds could independently acquire positions in RGC common stock, effectively acting in parallel with Pinnacle Harbor without formally constituting a Section 13(d)(3) group. This "wolf pack" dynamic could result in a significant aggregation of voting power in the hands of investors sympathetic to Pinnacle Harbor's agenda, without triggering any disclosure obligati

3. Loss of Negotiating Leverage. The mere threat of adopting a rights plan — the concept of a "pill on the shelf" — provides the Board with meaningful negotiating leverage in settlement discussions with Pinnacle Harbor. However, if the Board publicly declines to adopt a plan, and if that decision becomes known to Pinnacle Harbor or to the market, the credibility of the pill threat may be diminished. Actual non-adopti

4. Precedent Effect. A decision not to adopt a rights plan in response to the current campaign could establish a precedent that emboldens future activist campaigns against RGC. Other activist funds may perceive RGC as a company that is reluctant to deploy aggressive defensive measures, making the Company a more attractive target for future campaigns. C. Alternative Defensive Measures The Board has a range of alternat