1033-00003 · Redstone Gaming Corp · SEC Filings

current-report-8k-draft.docx DOCUMENT M&A / Corporate

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DRAFT — PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

Prepared by: Calderwood & Harkness LLP, 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169 Matter No.: 1033-00003 Primary Drafter: Claire Dempsey, Lead Associate, Capital Markets Practice Group Reviewed by: Douglas Fairchild, Responsible Partner Client: Redstone Gaming Corp.

Note to client: Draft for review and comment by Patricia Nakamura (General Counsel & Corporate Secretary) and Raymond Choi (CFO) prior to finalization and EDGAR filing. Exhibits to be attached upon execution of definitive agreement and finalization of joint press release. Confirm filing timing with Calloway Pinnacle Trust Bank (Thomas Ashford) and Harlan Ridge Communications (Philip Navarette) regarding market communication sequencing.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 10, 2023

Commission File Number: 001-41283 CIK: 0001847625

REDSTONE GAMING CORP.

(Exact name of registrant as specified in its charter)

8700 Las Vegas Boulevard South, Suite 2200 Las Vegas, NV 89123

(Address of principal executive offices, including zip code)

(702) 555-1800

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

• [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

• [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

• [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

• [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ] Yes [X] No

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. N/A

Item 1.01 — Entry into a Material Definitive Agreement.

On March 10, 2023, Redstone Gaming Corp., a Delaware corporation (the "Company"), entered into a Cooperation and Standstill Agreement (the "Agreement") with Pinnacle Harbor Capital Partners, LP, a Delaware limited partnership ("Pinnacle Harbor"), Pinnacle Harbor Capital Management, LLC, a Delaware limited liability company and the general partner of Pinnacle Harbor ("PHCM"), and Viktor S. Kessler, the Managing Partner and Chief Investment Officer of Pinnacle Harbor (together with Pinnacle Harbor and PHCM, the "Pinnacle Harbor Parties"). The Agreement was entered into following extensive arm's-length discussions between the Company and the Pinnacle Harbor Parties regarding, among other things, the composition of the Company's Board of Directors (the "Board"), certain strategic matters, and the Company's upcoming 2023 annual meeting of stockholders. A description of the material terms of the Agreement is set forth below.

Standstill Period. The Agreement provides for an 18-month standstill period commencing on March 10, 2023 and expiring on September 10, 2024 (the "Standstill Period"). During the Standstill Period, the Pinnacle Harbor Parties agree not to, among other things: (i) solicit proxies or consents, or become a participant or assist any other person in any solicitation of proxies or consents, with respect to the Company's securities; (ii) submit, or cause to be submitted, any stockholder proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise; (iii) nominate, or cause to be nominated, any candidates for election to the Board; (iv) seek to call or request a special meeting of stockholders of the Company, or seek to make, or make, a stockholder demand for books and records of the Company under Section 220 of the Delaware General Corporation Law or otherwise; (v) form, join, encourage the formation of, or in any way participate in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any securities of the Company; or (vi) publicly criticize or disparage the Company, any of its subsidiaries, or any of their respective current or former directors, officers, employees, or agents in any manner. The restrictions described in this paragraph are subject to certain customary carve-outs and exceptions as more fully set forth in the Agreement.

Ownership Cap. During the Standstill Period, the Pinnacle Harbor Parties agree that they will not, individually or collectively, acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another entity, by joining a 13D group, through the use of a derivative instrument, or otherwise, beneficial ownership (as defined under Rule 13d-3 of the Exchange Act) of shares of common stock of the Company (or rights, options, or other securities convertible into or exercisable or exchangeable for such shares, or any other economic interest in shares of common stock) in excess of 9.9% of the outstanding shares of common stock of the Company. As of the date of the Agreement, Pinnacle Harbor beneficially owns 7,119,600 shares of common stock, representing approximately 6.8% of the Company's 104,700,000 shares of common stock outstanding as of March 7, 2023, the most recent practicable date prior to the execution of the Agreement.

Board Composition — Mutually Agreed Independent Director. Pursuant to the Agreement, the Company has agreed to appoint one new independent director to the Board, to be mutually agreed upon by the Company and Pinnacle Harbor from a pool of three candidates identified by a joint committee comprising representatives of both the Company and the Pinnacle Harbor Parties. The mutually agreed independent director is neither a nominee or designee of Pinnacle Harbor nor a current insider of the Company. Following discussions between the parties, the Company and Pinnacle Harbor have mutually agreed upon the appointment of Franklin Chu, age 52, formerly the Chief Executive Officer of Prism Digital Entertainment, LLC, a California-based digital entertainment company, as the mutually agreed independent director (the "Mutually Agreed Director"). Mr. Chu's appointment to the Board will be effective as of April 1, 2023, and he will serve as a director until the Company's 2025 annual meeting of stockholders, or until his earlier resignation, removal, or death, or until his successor is duly elected and qualified. Additional information regarding Mr. Chu's appointment is set forth below under Item 5.02 of this Current Report on Form 8-K.

Strategic Review. The Board has agreed, pursuant to the Agreement, to conduct an internal review of strategic alternatives for the Company's interactive gaming division (the "Strategic Review"), which review is to be completed within 120 days of the date of execution of the Agreement (i.e., by July 8, 2023). The Strategic Review will be overseen by the Board or a committee thereof and may include, among other considerations, an assessment of the strategic, operational, and financial alternatives available to the Company with respect to the interactive gaming division. Upon completion, a summary report of the Strategic Review will be delivered to the Board for its consideration. The Company has no obligation under the Agreement to share or disclose the conclusions, findings, or recommendations of the Strategic Review with the Pinnacle Harbor Parties, and the Agreement does not require the Company to take any particular action as a result of the Strategic Review.

Voting Commitment. During the Standstill Period, the Pinnacle Harbor Parties agree to appear in person or by proxy at each annual or special meeting of stockholders of the Company at which a quorum is present and to vote all shares of common stock of the Company beneficially owned by them at each such meeting: (a) in favor of each of the Company's management director nominees for election to the Board; and (b) in accordance with the Board's recommendations on all other proposals properly submitted to a vote of the stockholders of the Company at each such meeting, in each case subject to certain limited exceptions relating to extraordinary corporate transactions as more fully described in the Agreement.

Withdrawal of Nominations. The Pinnacle Harbor Parties have agreed to immediately and irrevocably withdraw, and have withdrawn, all director nominations previously submitted to the Company in connection with the Company's 2023 annual meeting of stockholders, including, without limitation, the nominations of Dr. Sandra Trevelyan and Hugh Desmond Grayson, which nominations were submitted by Pinnacle Harbor's counsel, Hargrove Sloane & Birch LLP, by formal nomination notice dated January 9, 2023. The Pinnacle Harbor Parties agree that they will not solicit proxies or consents or submit any director nominations during the Standstill Period.

Non-Disparagement. The Agreement contains mutual non-disparagement obligations binding on the Company and the Pinnacle Harbor Parties during the Standstill Period. Each party has agreed to refrain from making, directly or indirectly, any public statement that criticizes, disparages, denigrates, or is reasonably likely to damage the reputation of the other party or, in the case of the Company, any of its current directors, officers, or employees, or, in the case of the Pinnacle Harbor Parties, any of their respective principals, partners, members, or employees. Nothing in the Agreement is intended to restrict the ability of either party to comply with applicable legal requirements, including any subpoena or legal process, or to make truthful statements in the course of any litigation or governmental proceeding.

Expense Reimbursement. The Company has agreed to reimburse Pinnacle Harbor for its reasonable and documented out-of-pocket legal expenses incurred in connection with the negotiation, drafting, and execution of the Agreement and the matters leading to its execution, including all costs and expenses of Pinnacle Harbor's legal counsel, Hargrove Sloane & Birch LLP, subject to an aggregate cap of $750,000. Such reimbursement shall be made within 30 business days following the Company's receipt of reasonably detailed invoices or other supporting documentation from Pinnacle Harbor, subject to customary review and verification procedures.

Termination. The Agreement may be terminated by either party upon the occurrence of any of the following events: (i) a material breach by the other party of any provision of the Agreement that remains uncured for a period of 15 business days following the delivery of written notice of such breach by the non-breaching party to the breaching party; (ii) the occurrence of a "Change of Control" of the Company (as defined in the Agreement); or (iii) the Pinnacle Harbor Parties' beneficial ownership of common stock of the Company falling below 3.5% of the outstanding shares of common stock of the Company. Upon termination of the Agreement, all obligations of the parties thereunder shall cease and terminate, except that the non-disparagement obligations and certain confidentiality provisions shall survive for a period of 12 months following such termination.

Governing Law. The Agreement is governed by, and shall be construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation and Standstill Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. Stockholders and other interested parties are encouraged to read the Agreement in its entirety for a more complete understanding of the terms and conditions thereof.

Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Franklin Chu

In connection with the Cooperation and Standstill Agreement described in Item 1.01 of this Current Report on Form 8-K, on March 10, 2023, the Board of Directors of the Company approved the appointment of Franklin Chu as an independent director of the Company, effective as of April 1, 2023. Following Mr. Chu's appointment, the Board will consist of 10 directors.

Mr. Chu will serve as a director of the Company until the Company's 2025 annual meeting of stockholders, or until his earlier resignation, removal, or death, or until his successor is duly elected and qualified.

Mr. Chu, age 52, most recently served as Chief Executive Officer of Prism Digital Entertainment, LLC, a California-based digital entertainment company, from 2017 to 2022, where he led the company's expansion into mobile gaming and interactive media platforms. Prior to his tenure at Prism Digital Entertainment, Mr. Chu held senior leadership positions at several technology and entertainment companies. Additional biographical information regarding Mr. Chu, including a complete description of his business experience during the past five years, and his committee assignments, if any, will be disclosed by amendment to this Current Report on Form 8-K or in the Company's proxy statement for its 2024 annual meeting of stockholders, as applicable.

Mr. Chu's appointment to the Board was made pursuant to the Cooperation and Standstill Agreement described in Item 1.01 above. Other than the Agreement, there are no arrangements or understandings between Mr. Chu and any other person pursuant to which he was selected as a director of the Company. There are no transactions between Mr. Chu (or any member of his immediate family) and the Company that would be reportable under Item 404(a) of Regulation S-K.

Mr. Chu will receive compensation for his service as a non-employee director of the Company consistent with the Company's standard non-employee director compensation program, which currently provides for an annual cash retainer and an annual equity award in the form of restricted stock units. The specific details of Mr. Chu's compensation arrangements will be disclosed as required under applicable SEC rules and regulations, including in the Company's proxy statement for its 2024 annual meeting of stockholders, as applicable.

Item 8.01 — Other Events.

Withdrawal of Activist Director Nominations and Resolution of Board-Seat Campaign

On March 13, 2023, the Company and Pinnacle Harbor Capital Partners, LP issued a joint press release announcing: (i) the execution of the Cooperation and Standstill Agreement, dated March 10, 2023, by and among the Company, Pinnacle Harbor, Pinnacle Harbor Capital Management, LLC, and Viktor S. Kessler; (ii) the appointment of Franklin Chu to the Board, effective April 1, 2023, as a mutually agreed independent director; and (iii) the withdrawal by Pinnacle Harbor of all director nominations previously submitted to the Company in connection with the Company's 2023 annual meeting of stockholders. As a result of the execution of the Agreement and the withdrawal of Pinnacle Harbor's director nominations, the Company's 2023 annual meeting of stockholders, which is currently scheduled to be held on May 18, 2023, is expected to proceed as an uncontested election. A copy of the joint press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Background

On November 10, 2022, Pinnacle Harbor filed a preliminary Schedule 13D with the U.S. Securities and Exchange Commission (the "SEC") disclosing that it had acquired beneficial ownership of approximately 6.8% of the Company's outstanding shares of common stock, representing 7,119,600 shares.

Pinnacle Harbor had previously sent a private letter to Diane K. Sheridan, the Company's Board Chair, on October 28, 2022, in which Pinnacle Harbor expressed its views regarding the Company's corporate governance practices, capital allocation strategy, and operational performance, and demanded, among other things: (a) the appointment of two Pinnacle Harbor-designated nominees to the Board; (b) a comprehensive strategic review of the Company's interactive gaming division, which generated approximately $412 million in revenue in the fiscal year ended December 31, 2021; and (c) the return of approximately $300 million to stockholders through share repurchases, a special dividend, or a combination thereof.

On November 30, 2022, Pinnacle Harbor issued a public open letter addressed to the Board reiterating its demands and publicly disclosing its investment thesis and its criticisms of the Company's strategy and governance. The open letter was widely reported in financial media and resulted in significant public attention to the Company's upcoming 2023 annual meeting of stockholders.

On January 9, 2023, the Company received a formal nomination notice from Pinnacle Harbor's legal counsel, Hargrove Sloane & Birch LLP, formally nominating Dr. Sandra Trevelyan and Hugh Desmond Grayson for election to the Board at the Company's 2023 annual meeting of stockholders.

Following the receipt of the nomination notice, and upon authorization by a Special Committee of independent directors of the Board, comprised of James Delacroix (Chair), Carmen Vasquez, and Randall Morse, the Company, through its outside counsel, Calderwood & Harkness LLP, engaged in direct settlement discussions with Pinnacle Harbor and its counsel. These discussions, which took place over a period of approximately two months, addressed, among other topics, board composition, the scope and terms of a standstill arrangement, the parameters of a potential strategic review, and the mutual obligations of the parties. The discussions ultimately culminated in the execution of the Agreement on March 10, 2023, reflecting a comprehensive resolution of the matters in dispute between the Company and the Pinnacle Harbor Parties.

On March 15, 2023, Pinnacle Harbor filed an Amendment No. 1 to its Schedule 13D with the SEC reflecting the standstill arrangement set forth in the Agreement and the withdrawal of its director nominations for the Company's 2023 annual meeting of stockholders.

Item 9.01 — Financial Statements and Exhibits.

(d) Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

REDSTONE GAMING CORP.

Date: March 15, 2023

By: ________

Name: Patricia Nakamura

Title: General Counsel and Corporate Secretary

Delaware	001-41283	82-4031976
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	RGC	The Nasdaq Stock Market LLC
Exhibit Number	Description
10.1	Cooperation and Standstill Agreement, dated March 10, 2023, by and among Redstone Gaming Corp., Pinnacle Harbor Capital Partners, LP, Pinnacle Harbor Capital Management, LLC, and Viktor S. Kessler.
99.1	Joint Press Release, dated March 13, 2023, issued by Redstone Gaming Corp. and Pinnacle Harbor Capital Partners, LP.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

DRAFT — PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
Prepared by: Calderwood & Harkness LLP, 3960 Howard Hughes Parkway, Suite 1400, Las Vegas, NV 89169 Matter No.: 1033-00003 Primary Drafter: Claire Dempsey, Lead Associate, Capital Markets Practice Group Reviewed by: Douglas Fairchild, Responsible Partner Client: Redstone Gaming Corp.
Note to client: Draft for review and comment by Patricia Nakamura (General Counsel & Corporate Secretary) and Raymond Choi (CFO) prior to finalization and EDGAR filing. Exhibits to be attached upon execution of definitive agreement and finalization of joint press release. Confirm filing timing with Calloway Pinnacle Trust Bank (Thomas Ashford) and Harlan Ridge Communications (Philip Navarette) regarding market communication sequencing.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2023
Commission File Number: 001-41283 CIK: 0001847625
REDSTONE GAMING CORP.
(Exact name of registrant as specified in its charter)
8700 Las Vegas Boulevard South, Suite 2200 Las Vegas, NV 89123
(Address of principal executive offices, including zip code)
(702) 555-1800
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
•  [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
•  [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
•  [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
•  [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ] Yes [X] No
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. N/A
Item 1.01 — Entry into a Material Definitive Agreement.
On March 10, 2023, Redstone Gaming Corp., a Delaware corporation (the "Company"), entered into a Cooperation and Standstill Agreement (the "Agreement") with Pinnacle Harbor Capital Partners, LP, a Delaware limited partnership ("Pinnacle Harbor"), Pinnacle Harbor Capital Management, LLC, a Delaware limited liability company and the general partner of Pinnacle Harbor ("PHCM"), and Viktor S. Kessler, the Managing Partner and Chief Investment Officer of Pinnacle Harbor (together with Pinnacle Harbor and PHCM, the "Pinnacle Harbor Parties"). The Agreement was entered into following extensive arm's-length discussions between the Company and the Pinnacle Harbor Parties regarding, among other things, the composition of the Company's Board of Directors (the "Board"), certain strategic matters, and the Company's upcoming 2023 annual meeting of stockholders. A description of the material terms of the Agreement is set forth below.
Standstill Period. The Agreement provides for an 18-month standstill period commencing on March 10, 2023 and expiring on September 10, 2024 (the "Standstill Period"). During the Standstill Period, the Pinnacle Harbor Parties agree not to, among other things: (i) solicit proxies or consents, or become a participant or assist any other person in any solicitation of proxies or consents, with respect to the Company's securities; (ii) submit, or cause to be submitted, any stockholder proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise; (iii) nominate, or cause to be nominated, any candidates for election to the Board; (iv) seek to call or request a special meeting of stockholders of the Company, or seek to make, or make, a stockholder demand for books and records of the Company under Section 220 of the Delaware General Corporation Law or otherwise; (v) form, join, encourage the formation of, or in any way participate in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any securities of the Company; or (vi) publicly criticize or disparage the Company, any of its subsidiaries, or any of their respective current or former directors, officers, employees, or agents in any manner. The restrictions described in this paragraph are subject to certain customary carve-outs and exceptions as more fully set forth in the Agreement.
Ownership Cap. During the Standstill Period, the Pinnacle Harbor Parties agree that they will not, individually or collectively, acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another entity, by joining a 13D group, through the use of a derivative instrument, or otherwise, beneficial ownership (as defined under Rule 13d-3 of the Exchange Act) of shares of common stock of the Company (or rights, options, or other securities convertible into or exercisable or exchangeable for such shares, or any other economic interest in shares of common stock) in excess of 9.9% of the outstanding shares of common stock of the Company. As of the date of the Agreement, Pinnacle Harbor beneficially owns 7,119,600 shares of common stock, representing approximately 6.8% of the Company's 104,700,000 shares of common stock outstanding as of March 7, 2023, the most recent practicable date prior to the execution of the Agreement.
Board Composition — Mutually Agreed Independent Director. Pursuant to the Agreement, the Company has agreed to appoint one new independent director to the Board, to be mutually agreed upon by the Company and Pinnacle Harbor from a pool of three candidates identified by a joint committee comprising representatives of both the Company and the Pinnacle Harbor Parties. The mutually agreed independent director is neither a nominee or designee of Pinnacle Harbor nor a current insider of the Company. Following discussions between the parties, the Company and Pinnacle Harbor have mutually agreed upon the appointment of Franklin Chu, age 52, formerly the Chief Executive Officer of Prism Digital Entertainment, LLC, a California-based digital entertainment company, as the mutually agreed independent director (the "Mutually Agreed Director"). Mr. Chu's appointment to the Board will be effective as of April 1, 2023, and he will serve as a director until the Company's 2025 annual meeting of stockholders, or until his earlier resignation, removal, or death, or until his successor is duly elected and qualified. Additional information regarding Mr. Chu's appointment is set forth below under Item 5.02 of this Current Report on Form 8-K.
Strategic Review. The Board has agreed, pursuant to the Agreement, to conduct an internal review of strategic alternatives for the Company's interactive gaming division (the "Strategic Review"), which review is to be completed within 120 days of the date of execution of the Agreement (i.e., by July 8, 2023). The Strategic Review will be overseen by the Board or a committee thereof and may include, among other considerations, an assessment of the strategic, operational, and financial alternatives available to the Company with respect to the interactive gaming division. Upon completion, a summary report of the Strategic Review will be delivered to the Board for its consideration. The Company has no obligation under the Agreement to share or disclose the conclusions, findings, or recommendations of the Strategic Review with the Pinnacle Harbor Parties, and the Agreement does not require the Company to take any particular action as a result of the Strategic Review.
Voting Commitment. During the Standstill Period, the Pinnacle Harbor Parties agree to appear in person or by proxy at each annual or special meeting of stockholders of the Company at which a quorum is present and to vote all shares of common stock of the Company beneficially owned by them at each such meeting: (a) in favor of each of the Company's management director nominees for election to the Board; and (b) in accordance with the Board's recommendations on all other proposals properly submitted to a vote of the stockholders of the Company at each such meeting, in each case subject to certain limited exceptions relating to extraordinary corporate transactions as more fully described in the Agreement.
Withdrawal of Nominations. The Pinnacle Harbor Parties have agreed to immediately and irrevocably withdraw, and have withdrawn, all director nominations previously submitted to the Company in connection with the Company's 2023 annual meeting of stockholders, including, without limitation, the nominations of Dr. Sandra Trevelyan and Hugh Desmond Grayson, which nominations were submitted by Pinnacle Harbor's counsel, Hargrove Sloane & Birch LLP, by formal nomination notice dated January 9, 2023. The Pinnacle Harbor Parties agree that they will not solicit proxies or consents or submit any director nominations during the Standstill Period.
Non-Disparagement. The Agreement contains mutual non-disparagement obligations binding on the Company and the Pinnacle Harbor Parties during the Standstill Period. Each party has agreed to refrain from making, directly or indirectly, any public statement that criticizes, disparages, denigrates, or is reasonably likely to damage the reputation of the other party or, in the case of the Company, any of its current directors, officers, or employees, or, in the case of the Pinnacle Harbor Parties, any of their respective principals, partners, members, or employees. Nothing in the Agreement is intended to restrict the ability of either party to comply with applicable legal requirements, including any subpoena or legal process, or to make truthful statements in the course of any litigation or governmental proceeding.
Expense Reimbursement. The Company has agreed to reimburse Pinnacle Harbor for its reasonable and documented out-of-pocket legal expenses incurred in connection with the negotiation, drafting, and execution of the Agreement and the matters leading to its execution, including all costs and expenses of Pinnacle Harbor's legal counsel, Hargrove Sloane & Birch LLP, subject to an aggregate cap of $750,000. Such reimbursement shall be made within 30 business days following the Company's receipt of reasonably detailed invoices or other supporting documentation from Pinnacle Harbor, subject to customary review and verification procedures.
Termination. The Agreement may be terminated by either party upon the occurrence of any of the following events: (i) a material breach by the other party of any provision of the Agreement that remains uncured for a period of 15 business days following the delivery of written notice of such breach by the non-breaching party to the breaching party; (ii) the occurrence of a "Change of Control" of the Company (as defined in the Agreement); or (iii) the Pinnacle Harbor Parties' beneficial ownership of common stock of the Company falling below 3.5% of the outstanding shares of common stock of the Company. Upon termination of the Agreement, all obligations of the parties thereunder shall cease and terminate, except that the non-disparagement obligations and certain confidentiality provisions shall survive for a period of 12 months following such termination.
Governing Law. The Agreement is governed by, and shall be construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation and Standstill Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. Stockholders and other interested parties are encouraged to read the Agreement in its entirety for a more complete understanding of the terms and conditions thereof.
Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Franklin Chu
In connection with the Cooperation and Standstill Agreement described in Item 1.01 of this Current Report on Form 8-K, on March 10, 2023, the Board of Directors of the Company approved the appointment of Franklin Chu as an independent director of the Company, effective as of April 1, 2023. Following Mr. Chu's appointment, the Board will consist of 10 directors.
Mr. Chu will serve as a director of the Company until the Company's 2025 annual meeting of stockholders, or until his earlier resignation, removal, or death, or until his successor is duly elected and qualified.
Mr. Chu, age 52, most recently served as Chief Executive Officer of Prism Digital Entertainment, LLC, a California-based digital entertainment company, from 2017 to 2022, where he led the company's expansion into mobile gaming and interactive media platforms. Prior to his tenure at Prism Digital Entertainment, Mr. Chu held senior leadership positions at several technology and entertainment companies. Additional biographical information regarding Mr. Chu, including a complete description of his business experience during the past five years, and his committee assignments, if any, will be disclosed by amendment to this Current Report on Form 8-K or in the Company's proxy statement for its 2024 annual meeting of stockholders, as applicable.
Mr. Chu's appointment to the Board was made pursuant to the Cooperation and Standstill Agreement described in Item 1.01 above. Other than the Agreement, there are no arrangements or understandings between Mr. Chu and any other person pursuant to which he was selected as a director of the Company. There are no transactions between Mr. Chu (or any member of his immediate family) and the Company that would be reportable under Item 404(a) of Regulation S-K.
Mr. Chu will receive compensation for his service as a non-employee director of the Company consistent with the Company's standard non-employee director compensation program, which currently provides for an annual cash retainer and an annual equity award in the form of restricted stock units. The specific details of Mr. Chu's compensation arrangements will be disclosed as required under applicable SEC rules and regulations, including in the Company's proxy statement for its 2024 annual meeting of stockholders, as applicable.
Item 8.01 — Other Events.
Withdrawal of Activist Director Nominations and Resolution of Board-Seat Campaign
On March 13, 2023, the Company and Pinnacle Harbor Capital Partners, LP issued a joint press release announcing: (i) the execution of the Cooperation and Standstill Agreement, dated March 10, 2023, by and among the Company, Pinnacle Harbor, Pinnacle Harbor Capital Management, LLC, and Viktor S. Kessler; (ii) the appointment of Franklin Chu to the Board, effective April 1, 2023, as a mutually agreed independent director; and (iii) the withdrawal by Pinnacle Harbor of all director nominations previously submitted to the Company in connection with the Company's 2023 annual meeting of stockholders. As a result of the execution of the Agreement and the withdrawal of Pinnacle Harbor's director nominations, the Company's 2023 annual meeting of stockholders, which is currently scheduled to be held on May 18, 2023, is expected to proceed as an uncontested election. A copy of the joint press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Background
On November 10, 2022, Pinnacle Harbor filed a preliminary Schedule 13D with the U.S. Securities and Exchange Commission (the "SEC") disclosing that it had acquired beneficial ownership of approximately 6.8% of the Company's outstanding shares of common stock, representing 7,119,600 shares.
Pinnacle Harbor had previously sent a private letter to Diane K. Sheridan, the Company's Board Chair, on October 28, 2022, in which Pinnacle Harbor expressed its views regarding the Company's corporate governance practices, capital allocation strategy, and operational performance, and demanded, among other things: (a) the appointment of two Pinnacle Harbor-designated nominees to the Board; (b) a comprehensive strategic review of the Company's interactive gaming division, which generated approximately $412 million in revenue in the fiscal year ended December 31, 2021; and (c) the return of approximately $300 million to stockholders through share repurchases, a special dividend, or a combination thereof.
On November 30, 2022, Pinnacle Harbor issued a public open letter addressed to the Board reiterating its demands and publicly disclosing its investment thesis and its criticisms of the Company's strategy and governance. The open letter was widely reported in financial media and resulted in significant public attention to the Company's upcoming 2023 annual meeting of stockholders.
On January 9, 2023, the Company received a formal nomination notice from Pinnacle Harbor's legal counsel, Hargrove Sloane & Birch LLP, formally nominating Dr. Sandra Trevelyan and Hugh Desmond Grayson for election to the Board at the Company's 2023 annual meeting of stockholders.
Following the receipt of the nomination notice, and upon authorization by a Special Committee of independent directors of the Board, comprised of James Delacroix (Chair), Carmen Vasquez, and Randall Morse, the Company, through its outside counsel, Calderwood & Harkness LLP, engaged in direct settlement discussions with Pinnacle Harbor and its counsel. These discussions, which took place over a period of approximately two months, addressed, among other topics, board composition, the scope and terms of a standstill arrangement, the parameters of a potential strategic review, and the mutual obligations of the parties. The discussions ultimately culminated in the execution of the Agreement on March 10, 2023, reflecting a comprehensive resolution of the matters in dispute between the Company and the Pinnacle Harbor Parties.
On March 15, 2023, Pinnacle Harbor filed an Amendment No. 1 to its Schedule 13D with the SEC reflecting the standstill arrangement set forth in the Agreement and the withdrawal of its director nominations for the Company's 2023 annual meeting of stockholders.
Item 9.01 — Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REDSTONE GAMING CORP.
Date: March 15, 2023
By: ________
Name: Patricia Nakamura
Title: General Counsel and Corporate Secretary
Delaware | 001-41283 | 82-4031976
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.01 per share | RGC | The Nasdaq Stock Market LLC
Exhibit Number | Description
10.1 | Cooperation and Standstill Agreement, dated March 10, 2023, by and among Redstone Gaming Corp., Pinnacle Harbor Capital Partners, LP, Pinnacle Harbor Capital Management, LLC, and Viktor S. Kessler.
99.1 | Joint Press Release, dated March 13, 2023, issued by Redstone Gaming Corp. and Pinnacle Harbor Capital Partners, LP.
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document).

DRAFT — PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

FORM 8-K

CURRENT REPORT

REDSTONE GAMING CORP.

SIGNATURES

REDSTONE GAMING CORP.

Record

Parties

Dates

Amounts