Rebecca,
I hope the week is off to a good start. I am writing in connection with the initial draft of the underwriting agreement that we circulated on Friday in connection with the proposed $180,000,000 follow-on equity offering of common stock by Redstone Gaming Corp. (NYSE: RDGM) (SEC File No. 333-278401). As you know, the draft was prepared on the basis of the terms discussed on the organizational call and the preliminary prospectus supplement filed on October 6, 2025 under Rule 424(b)(5).
To facilitate an efficient negotiation process, I wanted to flag the key issues in the draft that we expect will be points of discussion between the parties. I think it would be productive to schedule a call later this week or early next week to walk through these items — Vivienne and Thomas can join as needed.
Set forth below are the principal issues we have identified:
**1. Scope of Issuer's Representations Regarding Gaming Regulatory Compliance (Section [__])**
The initial draft includes broad representations by RGC regarding compliance with all applicable gaming laws and regulations in each jurisdiction where RGC operates — Nevada, New Jersey, and Mississippi — and in each jurisdiction where RGC has pending applications — Louisiana and Indiana. As background, RGC currently holds active licenses from the Nevada Gaming Commission (License No. NGC-2019-04172), the New Jersey Division of Gaming Enforcement (License No. NJDGE-2020-1138), and the Mississippi Gaming Commission (License No. MGC-2018-0623). RGC also has pending applications with the Louisiana Gaming Control Board (submitted August 12, 2025) and the Indiana Gaming Commission (submitted September 5, 2025).
Our position is that the issuer's representations should be limited to *material* compliance with gaming laws and should include a knowledge qualifier with respect to the pending applications, since RGC cannot represent the outcome of pending regulatory processes that remain within the discretion of the applicable gaming authorities. We also believe the representation should be limited to matters that would reasonably be expected to have a Material Adverse Effect. We recognize that the underwriters may prefer a flat compliance representation without materiality qualifiers, and we flag this as a key discussion point. I would note that the prospectus supplement risk factors already provide fulsome disclosure of the regulatory risks associated with RGC's multi-state expansion strategy and pending applications.
**2. Survival Period for Indemnification Obligations (Section [__])**
The initial draft provides that the issuer's indemnification obligations survive closing and any termination of the underwriting agreement without limitation as to time. We believe it is more appropriate to tie the survival period to the applicable statutes of limitations under the Securities Act — that is, one year from the date the registration statement became effective for Section 11 claims, and three years from the date of the offering for Section 12 claims — rather than having the indemnification obligations survive indefinitely. In the interest of symmetry, the underwriters' indemnification of the issuer should be subject to the same survival framework. We expect this will be a point of discussion and would note that market practice in recent gaming-sector follow-on offerings has varied on this point.
**3. Materiality Qualifiers on Representations and Warranties**
Several representations in the initial draft — including those relating to financial statements, absence of material adverse change, tax compliance, and ERISA — include "Material Adverse Effect" qualifiers. We believe these qualifiers are appropriate and consistent with market practice for follow-on offerings by seasoned issuers with the scale and complexity of RGC, which reported FY 2024 revenue of approximately $2.47 billion and maintains operations across multiple jurisdictions. We anticipate that you may seek to remove or narrow certain MAE qualifiers, particularly on the financial statement and no-MAC representations, and we are prepared to discuss specific representations where the qualifiers may be appropriately narrowed. That said, we will resist removal of MAE qualifiers on the gaming regulatory compliance and litigation representations given the multi-jurisdictional nature of RGC's operations.
Relatedly, with respect to the bring-down certificate to be delivered by Marcus Hale (CEO) and Lena Okafor (CFO) at closing on October 31, 2025, our position is that the bring-down should bring down the representations with their qualifiers intact, rather than on a "flat" basis. This ties into the next item.
**4. Bring-Down Conditions (Section [__])**
The initial draft conditions closing on a bring-down of the issuer's representations and warranties as of the closing date, which is expected to be October 31, 2025 (T+3 from anticipated pricing on October 28, 2025). Our position is that the bring-down should be to a "material respects" standard — i.e., the representations remain true and correct in all material respects as of the closing date — rather than a "flat" bring-down requiring that the representations be true and correct in all respects. For representations that already contain a materiality or MAE qualifier, we will accept a flat bring-down in order to avoid the "double materiality" issue. We also expect there will be discussion regarding whether the no-material-adverse-change condition operates independently of, or is subsumed within, the general bring-down condition, and we are happy to work through that with you.
**5. Lock-Up Release Mechanics (Section [__])**
The form of lock-up agreement appended to the underwriting agreement provides for a 90-day lock-up period from the date of the final prospectus supplement, binding on all 10 directors and executive officers of RGC and on Grandview Capital Partners, LP, which holds approximately 18,720,000 shares (representing approximately 12.28% of outstanding shares). The initial draft provides that the lock-up may be released only with the prior written consent of Pinnacle Zanthor & Co. as lead bookrunning manager. We have a few comments on this provision:
(a) The release consent should not be in the sole and absolute discretion of Pinnacle Zanthor. We propose that consent to a release be subject to a reasonableness standard.
(b) We request carve-outs for customary exceptions, including: (i) transfers for estate planning purposes, (ii) transfers to affiliates who agree to be bound by the lock-up, (iii) exercises of options under RGC's 2021 Equity Incentive Plan (approximately 3,850,000 options outstanding at a weighted-average exercise price of $19.72) where the underlying shares remain subject to the lock-up, and (iv) sales of shares pursuant to a pre-existing Rule 10b5-1 trading plan.
(c) If Pinnacle Zanthor releases any director or officer from the lock-up, the issuer should receive advance notice of at least three business days.
As a timing note, the Pricing Committee (Marcus Hale, Lena Okafor, and Patricia Moynihan), authorized by the Board resolution dated September 30, 2025, is expected to set final terms on October 28, 2025, and the lock-up agreements should be fully executed in advance of pricing. We should keep that timeline in mind as we work through these points.
**6. MNPI Provisions (Section [__])**
The initial draft includes a covenant by the issuer not to provide material non-public information to the underwriters without the underwriters' prior consent, together with a "cleansing" mechanism. We have the following comments:
(a) The MNPI covenant should be mutual — the underwriters should also agree not to disseminate any MNPI received from the issuer to persons not involved in the offering.
(b) The definition of MNPI should track the definition under Regulation FD.
(c) Any "cleansing" obligation should be subject to the issuer's reasonable judgment regarding the timing and method of public disclosure.
(d) The covenant should survive for 90 days following closing, coterminous with the lock-up period, rather than indefinitely.
This provision is particularly sensitive in the RGC context given the pending regulatory applications in Louisiana and Indiana. Premature disclosure of information relating to those applications could have adverse regulatory consequences, and we want to ensure the MNPI framework accommodates that concern.
**Additional Items (Briefly Noted)**
- *Syndicate Allocation Schedule:* Please confirm that the allocation reflected in Schedule I is consistent with the Agreement Among Underwriters: 60% Pinnacle Zanthor & Co. (3,934,426 shares), 30% Hargrove Williams (1,967,213 shares), and 10% Clearwater (655,738 shares), with the over-allotment option of 983,606 additional shares allocated pro rata.
- *Closing Deliverables:* The conditions to closing include delivery of the comfort letter from Kaplan Feld & Associates LLP (initial and bring-down), the legal opinion (Exhibit 5.1) from Calderwood & Harkness covering up to 7,540,983 shares (base offering plus greenshoe), a negative assurance (10b-5) letter from Calderwood & Harkness, officer's certificates from Marcus Hale and Lena Okafor, secretary's certificate, and good standing certificates from Delaware and Nevada. Please confirm that these deliverables are acceptable to the underwriters, and let us know if the underwriters anticipate requiring any additional closing deliverables.
- *Termination Rights:* The initial draft provides for underwriter termination rights in the event of, among other things, a material adverse change, force majeure, or suspension of trading on the NYSE. We expect these provisions will be relatively standard and do not anticipate significant negotiation, but we would flag that the MAC definition in the termination provisions should be consistent with the MAE definition used in the representations to avoid any interpretive ambiguity.
* * *
Rebecca, we would appreciate it if you could review the foregoing and revert with W&P's preliminary comments, along with any additional items from the underwriters' side that we have not addressed. If it works for you, I would suggest scheduling a call for Thursday, October 16, or Friday, October 17, to discuss. I will send a calendar invite once you confirm your availability.
On a related note, we are also working on the SEC comment response on a parallel track — we received a comment letter on October 14, 2025, with six comments — and are targeting a response by October 21, 2025. Certain revisions to the prospectus supplement that may result from that process could affect the representations and disclosure schedules in the underwriting agreement, so we will want to keep the two workstreams coordinated.
Please do not hesitate to reach out if you have any questions in the interim.
Best regards,
Brendan Walsh Calderwood & Harkness LLP 7 Times Square, 38th Floor New York, NY 10036 T: (212) 506-3847 bwalsh@calderwoodharkness.com
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