1033-00006 · Redstone Gaming Corp · Case Closing

client-letter-case-closure.docx DOCUMENT Litigation

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CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP Attorneys at Law

333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-8200 Facsimile: (213) 555-8201 www.calderwoodharkness.com

January 15, 2025

Mr. Derek Olafson General Counsel Redstone Gaming Corp. 8800 Crimson Ridge Parkway, Suite 1200 Las Vegas, NV 89113

Re: Redstone Gaming Corp. v. Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch Case No. 24STCV-01892 Superior Court of California, County of Los Angeles Matter Closure and Document Retention

Dear Derek:

1. Purpose and Context

Calderwood & Harkness LLP writes to advise that, following the execution of the Settlement Agreement and Mutual Release on January 6, 2025 (the "Settlement Agreement"), the firm is commencing formal closure of the matter file for Redstone Gaming Corp. v. Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch, Case No. 24STCV-01892, in the Superior Court of California, County of Los Angeles. This letter sets forth a summary of the settlement outcome, identifies remaining action items and post-settlement deadlines that require monitoring, addresses billing matters, and describes the firm's document retention policy applicable to the closed matter file.

It has been a genuine privilege to represent Redstone Gaming Corp. ("RGC" or the "Company") throughout this engagement, which commenced on February 5, 2024, when the Company retained Calderwood & Harkness to pursue affirmative claims against the defendants arising out of the publication of materially false and defamatory short-seller research reports targeting RGC's publicly traded common stock (NASDAQ: RDGM). Over the course of the past eleven months, this matter has demanded sustained and rigorous effort from both our engagement team and the RGC team, and we are pleased that the effort has culminated in a favorable resolution for the Company. The settlement secures a total monetary recovery of $14.75 million, negotiated corrective statements that publicly acknowledge the material inaccuracies in the defendants' reports, and a stipulated permanent injunction that bars the defendants from republishing the reports or trading in RDGM securities for a period of five years. This result reflects both the strength of RGC's claims and the collaborative, strategic approach that both teams brought to the litigation from its inception.

The purpose of this letter is to ensure that you and the broader RGC leadership team have a comprehensive record of the matter's resolution, the outstanding post-settlement obligations that require continued attention, and the firm's procedures with respect to the matter file going forward.

2. Summary of Settlement Outcome

For the record and for the convenience of the RGC team, we summarize below the key terms of the Settlement Agreement executed on January 6, 2025 (the "Effective Date"). This summary is provided for reference only and is qualified in its entirety by the terms of the Settlement Agreement itself, a conformed copy of which is enclosed with this letter.

Monetary Recovery. The settlement provides for a total monetary recovery of $14,750,000.00. This amount is funded from two sources: (i) $10,250,000.00 from Ironclad Surety & Insurance Co. ("Ironclad"), payable under Directors & Officers / Media Liability Policy No. ML-2023-07714 issued to Grizzly Peak Research LLC ("GPR"); and (ii) $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP ("GPCP"), jointly and severally. The allocation between the insured and uninsured portions of the settlement was the product of extensive negotiation with both defense counsel at Caldwell, Tseng & Barrow LLP and Ironclad's coverage counsel, and reflects the scope of covered and uncovered claims asserted in the litigation.

Corrective Statements. GPR is required to publish a Corrective Publication of not fewer than 1,500 words on its website, grizzlypeakresearch.com, acknowledging material inaccuracies contained in the three research reports that formed the basis of RGC's claims — specifically, the reports titled "House of Cards" (published March 14, 2024), "Rigged Reels" (published April 22, 2024), and "Double Down on Fraud" (published June 3, 2024). The text of the Corrective Publication was negotiated by the parties and is attached as Exhibit C to the Settlement Agreement. In addition, GPR is required to post a summary corrective statement of not fewer than 280 characters on the @GrizzlyPeakRes social media account (on the Westvale Solutions platform), which must include a hyperlink to the full Corrective Publication on grizzlypeakresearch.com. Both corrective statements are required to remain posted and publicly accessible for a period of not less than twenty-four (24) months from the date of initial posting.

Permanent Injunction. The defendants — GPR, GPCP, and Tobias Fenchurch, individually — are permanently enjoined from republishing, reposting, redistributing, or otherwise disseminating the three reports identified above, or any statements that are substantially similar in content or import to the statements contained in those reports regarding RGC, its officers, directors, operations, or financial condition. In addition, the defendants are subject to a five-year bar on trading, directly or indirectly, in RDGM securities, including common stock, options, and any other derivative instruments. The trading bar runs from the Effective Date through January 6, 2030. The stipulated permanent injunction will be submitted to the court for entry as described in Section 3.3 below, and the court retains jurisdiction to enforce its terms.

Mutual Releases. The Settlement Agreement provides for broad mutual releases by and between the parties, releasing all claims, known and unknown, arising out of or related to the subject matter of the litigation, including a waiver of the protections of California Civil Code § 1542. The mutual releases contain express carve-outs for any claims arising from a breach of, or failure to perform obligations under, the Settlement Agreement itself.

Non-Disparagement. The parties have agreed to a mutual non-disparagement clause with a term of three (3) years. As measured from the Effective Date of January 6, 2025, the non-disparagement obligation expires on January 6, 2028. During this period, neither party shall make, publish, or cause to be made or published any disparaging statements regarding the other party, its officers, directors, employees, or affiliates in connection with the matters at issue in the litigation. The non-disparagement clause is subject to customary exceptions for truthful statements required by law, regulation, or legal process.

Confidentiality. The specific monetary amount of the settlement is confidential under the terms of the Settlement Agreement, and neither party may disclose the settlement amount except as required by law, regulation, or applicable securities disclosure obligations. Notably, the existence of the settlement and the content of the corrective statements are expressly excluded from the confidentiality restriction, permitting RGC to reference the settlement and the corrective statements publicly, including in communications with investors, regulators, and the media.

Dismissal. The parties have agreed to a stipulated dismissal with prejudice of all claims and counterclaims. The court will retain jurisdiction to enforce the terms of the Settlement Agreement pursuant to California Code of Civil Procedure § 664.6, which permits the court to enter judgment upon motion of a party in the event of a breach or dispute regarding the settlement terms. This retained jurisdiction provides RGC with a streamlined enforcement mechanism should any issues arise with the defendants' compliance with their post-settlement obligations.

3. Remaining Action Items and Key Deadlines

Although the matter file is being closed for purposes of active litigation management, several post-settlement obligations and associated deadlines remain outstanding. Calderwood & Harkness flags each of these items for RGC's attention and ongoing monitoring. We strongly recommend that you calendar each of the dates identified below and assign responsibility within the RGC organization for confirming compliance.

3.1 Corrective Publication Posting — Target Deadline: January 13, 2025

Under Section 5.2 of the Settlement Agreement, GPR is required to post the Corrective Publication on grizzlypeakresearch.com within five (5) business days of the Effective Date. The Effective Date is January 6, 2025, which means the deadline for posting is January 13, 2025. GPR is also required to post the summary social media corrective statement on the @GrizzlyPeakRes account on the Westvale Solutions platform by the same deadline, with a functioning hyperlink to the full text of the Corrective Publication.

We recommend that RGC designate one or more individuals to monitor grizzlypeakresearch.com and the @GrizzlyPeakRes social media account to confirm timely posting. In particular, we suggest that Janelle Hu, Vice President, Investor Relations, and/or the crisis-communications team at Crestline Equity Partners Group Inc., led by Simone Arecchi, who has been closely involved in the Company's public messaging throughout this matter, undertake this monitoring function. Confirmation should include screenshots or other contemporaneous documentation of the postings, including timestamps, to preserve evidence of compliance in the event of any future dispute.

If the corrective statements have not been posted by the close of business on January 13, 2025, or if the statements as posted are materially deficient relative to the text agreed upon in Exhibit C to the Settlement Agreement, please notify Calderwood & Harkness immediately. In such circumstances, we would be prepared to initiate enforcement proceedings under the court's retained jurisdiction pursuant to California Code of Civil Procedure § 664.6, and/or to seek contempt sanctions in connection with the stipulated permanent injunction once entered.

Additionally, the Corrective Publication is required to remain posted and publicly accessible for a minimum period of twenty-four (24) months from the date of initial posting, through approximately January 2027. We recommend periodic spot-checks throughout that period, as discussed further in Section 3.4 below.

3.2 Escrow Deposit — Deadline: February 5, 2025

Under Section 4.1 of the Settlement Agreement, all settlement funds totaling $14,750,000.00 are to be deposited into escrow at Great Basin Trust Company, N.A., located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, NV 89169, within thirty (30) calendar days of the Effective Date. This deadline falls on February 5, 2025.

The escrow deposit will be funded from two sources:

(a) $10,250,000.00 from Ironclad Surety & Insurance Co., payable under D&O/Media Liability Policy No. ML-2023-07714; and

(b) $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP, jointly and severally.

Wire transfer instructions have been provided to Great Basin Trust Company, N.A. by our office, and confirmed by the escrow officer assigned to the matter. Calderwood & Harkness will coordinate with defense counsel Raymond Caldwell and Natalie Orenstein at Caldwell, Tseng & Barrow LLP, and with Daniel Royce, Claims Examiner at Ironclad Surety, to confirm timely remittance of both funding components. We will notify you promptly upon confirmation that all funds have been received into escrow.

Following receipt and clearance of the escrowed funds, the disbursement process will proceed in accordance with the escrow instructions executed by the parties. We anticipate that the net proceeds, after satisfaction of any applicable escrow fees and costs, will be available for disbursement to RGC within approximately five (5) business days of full funding.

3.3 Filing of Stipulated Dismissal with Prejudice — Target: February 19, 2025

Under Section 7.1 of the Settlement Agreement, the Stipulation and Proposed Order for Dismissal with Prejudice is to be filed with the Superior Court of California, County of Los Angeles, before the Honorable Judge Patricia Yamamoto (Department 51), within ten (10) business days of the full funding of the escrow deposit. Assuming timely funding by February 5, 2025, the filing deadline falls on approximately February 19, 2025.

Concurrently with the filing of the stipulated dismissal, we will submit the Stipulation and Proposed Order for Entry of Permanent Injunction, which will formalize the injunctive provisions of the Settlement Agreement as an order of the court. Entry of the permanent injunction as a court order is important because it provides RGC with the ability to seek enforcement through contempt proceedings in the event of any future violation by the defendants.

Calderwood & Harkness will handle all aspects of the filing, including coordination with defense counsel on the execution of the stipulations and the submission of proposed orders to the court. We will provide RGC with conformed copies of all filed documents promptly upon entry by the court.

3.4 Ongoing Compliance Monitoring

Beyond the immediate post-settlement deadlines described above, RGC should establish a process for periodic monitoring of the defendants' compliance with their ongoing obligations under the Settlement Agreement and the permanent injunction. Specifically, we recommend that RGC confirm on a regular basis (quarterly, at a minimum) the following:

(a) Corrective Statements (through approximately January 6, 2027): The corrective statements — both the full Corrective Publication on grizzlypeakresearch.com and the summary social media corrective on @GrizzlyPeakRes — remain posted and publicly accessible for the full twenty-four (24) month period. Any removal, alteration, or de-indexing of the corrective statements prior to the expiration of the posting period would constitute a breach of the Settlement Agreement.

(b) Non-Disparagement (through January 6, 2028): The defendants comply with the mutual non-disparagement clause throughout the three-year term. This includes monitoring for public statements, publications, social media posts, interviews, or other communications by GPR, GPCP, Tobias Fenchurch, or their agents that could be construed as disparaging RGC, its officers, directors, employees, or affiliates in connection with the subject matter of the litigation.

(c) Securities Trading Injunction (through January 6, 2030): The defendants comply with the five-year bar on trading in RDGM securities. While direct monitoring of trading activity is inherently difficult, RGC's compliance and investor relations teams should remain alert to any indications of non-compliance, including unusual trading patterns, public disclosures, or regulatory filings that might suggest the defendants or their affiliates are transacting in RDGM securities or derivatives.

Any suspected violations of the Settlement Agreement or the permanent injunction should be reported to Calderwood & Harkness or, if another firm has been engaged as successor counsel for enforcement purposes, to that firm. As noted in Section 6 below, Calderwood & Harkness would be pleased to assist with any enforcement proceedings under a new or supplemental engagement.

4. Billing Summary

A detailed Final Billing Memorandum has been separately transmitted by Samuel Eklund, the Billing Partner for this engagement, directly to you under separate cover. For completeness, and to provide a summary record within this correspondence, we note the following key figures:

Total Hours Billed: Approximately 3,420 hours across the engagement team, consisting of Francesca Morano (Partner), Samuel Eklund (Partner), Carlos Espinoza (Senior Associate), and Hannah Brinkley (Associate).

Total discounted Fees: Approximately $2,800,623.00, reflecting the application of the 15% discount from standard hourly rates that was agreed upon in the engagement letter dated February 5, 2024 (i.e., fees billed at 85% of the firm's standard rates).

Success Premium: Approximately $420,093.00, reflecting the 15% success premium triggered by the execution of the Settlement Agreement, as contemplated by Section 6(b) of the engagement letter. The success premium was structured as 15% of the total discounted fees and is payable upon the successful resolution of the matter through settlement or judgment.

Total Engagement Fees: Approximately $3,220,716.00 (Discounted fees plus success premium).

Costs Advanced by the Firm: $187,450.00, representing costs advanced by Calderwood & Harkness on behalf of RGC during the course of the engagement, including expert witness fees (principally Dr. Elena Vostrikova at Meridian Forensic Economics LLC), deposition transcript costs (covering all fourteen depositions taken during the course of the litigation), and e-discovery vendor charges (for document hosting, processing, and review platform licensing).

Grand Total: Approximately $3,408,166.00.

All amounts are set forth in greater detail in the Final Billing Memorandum and the supporting invoice summaries transmitted by Mr. Eklund. We respectfully request confirmation that all outstanding invoices have been processed or will be processed in due course in accordance with the payment terms set forth in the engagement letter. Please do not hesitate to contact Mr. Eklund directly with any questions regarding the billing summary or individual invoices.

5. Document Retention Policy

With the closure of the matter file, Calderwood & Harkness's standard document retention policy will apply to all materials in the firm's possession related to Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al. We describe that policy below for your information.

Retention Period. The firm will retain the complete matter file, encompassing both physical and electronic records, for a period of seven (7) years from the date of matter closure. This retention period is consistent with the requirements of the applicable California Rules of Professional Conduct, the State Bar of California's guidelines on file retention, and the firm's internal retention schedule. For purposes of this matter, the date of matter closure will be deemed to be the date on which the stipulated dismissal with prejudice is entered by the court, which we anticipate will occur on or about February 19, 2025, or shortly thereafter.

Scope of Retained Materials. The matter file to be retained includes, without limitation, the following categories of materials:

(a) All pleadings, motions, briefs, and supporting declarations filed in the litigation;

(b) All court orders, minute orders, rulings, and related correspondence with the court;

(c) All correspondence between Calderwood & Harkness and RGC, defense counsel, third parties, and other participants in the litigation;

(d) All internal memoranda, research memoranda, strategy memoranda, and attorney work product prepared in connection with the matter;

(e) All discovery materials, including the approximately 87,000 documents produced in discovery by the parties and third parties, interrogatory responses, requests for admission responses, and related correspondence;

(f) All deposition transcripts from the fourteen (14) depositions taken during the course of the litigation, together with exhibits thereto and any video recordings;

(g) All expert reports and related materials, including Dr. Elena Vostrikova's event-study analysis and damages report prepared on behalf of RGC through Meridian Forensic Economics LLC, and the defendants' rebuttal expert materials;

(h) All settlement-related documents, including the Settlement Agreement and Mutual Release, the Corrective Publication text, escrow instructions, and related correspondence; and

(i) All billing records, time entries, invoices, and engagement-related financial records.

Destruction Following Retention Period. Following the expiration of the seven-year retention period, the firm will destroy all materials in the matter file — including both physical and electronic records — in accordance with its standard procedures, unless RGC has provided written instructions to the contrary prior to the scheduled destruction date. We will endeavor to provide advance notice to RGC prior to the scheduled destruction, but we urge you to calendar the approximate destruction date (seven years from the date of matter closure, or approximately February 2032) and to contact the firm in advance if you wish to extend the retention period or arrange for the return or transfer of the file.

Client Property. Original documents and materials provided by RGC to Calderwood & Harkness during the course of the engagement, together with any other property belonging to the client, will be returned upon request at any time. Additionally, RGC may request the return of all client materials, or a complete copy of the matter file, at any time during the retention period. Any such request should be directed to the undersigned or to Mr. Eklund in writing. Please note that the firm may charge reasonable costs for the reproduction and shipment of voluminous materials, particularly with respect to the electronic discovery database, which contains approximately 87,000 documents.

We advise you to notify the firm in writing if RGC wishes to have any or all materials returned or transferred to successor counsel. In the absence of such instructions, the firm will retain the materials in accordance with the retention schedule described above.

Privileged and Confidential Materials. We remind you that the matter file contains substantial volumes of attorney-client privileged communications and attorney work product, including strategy memoranda, legal research, draft pleadings, and internal correspondence between the engagement team and RGC's in-house legal department. If any materials from the file are returned to RGC or transferred to another law firm, appropriate safeguards should be maintained to preserve the privileged and confidential nature of those materials. Inadvertent disclosure of privileged materials to third parties could result in waiver of the attorney-client privilege, which could have significant consequences for RGC in the event of any future related proceedings.

Destruction of materials at the end of the retention period will be handled by the firm in a manner consistent with the confidential nature of the materials, including secure shredding of physical documents and certified deletion of electronic files.

6. Termination of Active Representation

Upon the completion of the remaining post-settlement filings described in Section 3 above — specifically, the filing of the Stipulation and Proposed Order for Dismissal with Prejudice and the Stipulation and Proposed Order for Entry of Permanent Injunction — Calderwood & Harkness's active representation of Redstone Gaming Corp. in this matter will conclude. At that point, the firm will have no further obligations to take any action on behalf of RGC in connection with Case No. 24STCV-01892, except as may be separately agreed.

Please be advised that, following the conclusion of active representation, the firm does not undertake any continuing obligation to monitor legal developments, regulatory changes, judicial decisions, or compliance matters related to the subject matter of this litigation, beyond the specific action items and deadlines identified in Section 3 of this letter. Similarly, the firm does not assume any ongoing obligation to monitor the defendants' compliance with the Settlement Agreement, the permanent injunction, or the non-disparagement clause. Responsibility for ongoing compliance monitoring will rest with RGC's in-house legal team, or with any successor counsel that RGC may engage for that purpose.

That said, should any enforcement issues arise under the Settlement Agreement — including, by way of example, the defendants' failure to timely post or maintain the corrective statements, any breach of the non-disparagement clause, or any violation of the securities trading injunction — RGC should not hesitate to contact the firm. Calderwood & Harkness would be pleased to assist with enforcement proceedings or related matters under a new or supplemental engagement letter, and the institutional knowledge and familiarity with the matter that our team has developed would allow us to respond efficiently to any such issues.

Finally, we wish to make clear that the closure of this matter pertains solely to Case No. 24STCV-01892 in the Superior Court of California, County of Los Angeles, and does not affect any other existing or future engagements between Calderwood & Harkness LLP and Redstone Gaming Corp. or its affiliates. Any separate matters in which the firm is currently engaged on behalf of RGC will continue in the ordinary course.

7. Acknowledgments and Closing Remarks

In closing, we wish to express our sincere appreciation for the trust and confidence that Redstone Gaming Corp. has placed in Calderwood & Harkness LLP throughout this engagement. This matter presented significant factual, legal, and strategic complexities, and we are grateful for the close collaboration and responsiveness of the RGC team at every stage. We extend particular thanks to Marcus J. Calloway, Chief Executive Officer, for his leadership and commitment to pursuing the Company's claims; to you, Derek, for your superb guidance and judgment as General Counsel in managing the litigation from the client side; to Priya Ramaswaran, Chief Financial Officer, for her invaluable assistance in assembling the financial data and analyses that supported the Company's damages case; and to Janelle Hu, Vice President, Investor Relations, for her tireless efforts in coordinating investor communications and managing market-facing disclosures during what was an extraordinarily challenging period for the Company.

We also wish to acknowledge the contributions of the broader team of advisors whose collaborative efforts were instrumental to the successful outcome of this matter. The forensic audit rebuttal prepared by Walter Ng and his team at Pinnacle Audit & Advisory LLP was central to dismantling the defendants' false allegations regarding RGC's financial reporting. The crisis communications strategy developed and executed by Simone Arecchi and her team at Crestline Equity Partners Group Inc. played a critical role in preserving investor confidence and managing public perception throughout the litigation. The team at Hargrove & Sato LLP, who handled the parallel Nevada gaming regulatory inquiries triggered by the defendants' reports, ensured that RGC's gaming licenses and regulatory standing were fully protected. And the expert damages analysis prepared by Dr. Elena Vostrikova at Meridian Forensic Economics LLC — including her event-study quantifying the stock-price impact of each of the three reports — provided the rigorous economic foundation that ultimately compelled the defendants and their insurer to agree to the settlement terms achieved.

The result obtained in this matter is significant by any measure: a monetary recovery of $14.75 million; public vindication of RGC through corrective statements that acknowledge the material inaccuracies in the defendants' reports; and permanent injunctive protections that prevent the defendants from republishing those reports or trading in RDGM securities for five years. This outcome reflects the strength of the Company's position and the dedication of everyone involved.

We are proud to have served as RGC's counsel in this matter, and we reiterate that Calderwood & Harkness stands ready to assist Redstone Gaming Corp. with any future legal needs, whether related to this matter or otherwise. Please do not hesitate to reach out at any time.

With warm regards,

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano Partner

333 South Grand Avenue, Suite 4800 Los Angeles, CA 90071 Direct: (213) 555-8217

Email: fmorano@calderwoodharkness.com

cc:

Marcus J. Calloway, Chief Executive Officer, Redstone Gaming Corp. Priya Ramaswaran, Chief Financial Officer, Redstone Gaming Corp. Janelle Hu, Vice President, Investor Relations, Redstone Gaming Corp. Samuel Eklund, Partner, Calderwood & Harkness LLP Carlos Espinoza, Senior Associate, Calderwood & Harkness LLP Hannah Brinkley, Associate, Calderwood & Harkness LLP

Enclosures:

(1) Conformed copy of the executed Settlement Agreement and Mutual Release (dated January 6, 2025) (2) Final Billing Summary (separately transmitted under cover of Samuel Eklund's memorandum of January 14, 2025)

CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-8200 Facsimile: (213) 555-8201 www.calderwoodharkness.com
January 15, 2025
Mr. Derek Olafson General Counsel Redstone Gaming Corp. 8800 Crimson Ridge Parkway, Suite 1200 Las Vegas, NV 89113
Re: Redstone Gaming Corp. v. Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch Case No. 24STCV-01892 Superior Court of California, County of Los Angeles Matter Closure and Document Retention
Dear Derek:
1. Purpose and Context
Calderwood & Harkness LLP writes to advise that, following the execution of the Settlement Agreement and Mutual Release on January 6, 2025 (the "Settlement Agreement"), the firm is commencing formal closure of the matter file for Redstone Gaming Corp. v. Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch, Case No. 24STCV-01892, in the Superior Court of California, County of Los Angeles. This letter sets forth a summary of the settlement outcome, identifies remaining action items and post-settlement deadlines that require monitoring, addresses billing matters, and describes the firm's document retention policy applicable to the closed matter file.
It has been a genuine privilege to represent Redstone Gaming Corp. ("RGC" or the "Company") throughout this engagement, which commenced on February 5, 2024, when the Company retained Calderwood & Harkness to pursue affirmative claims against the defendants arising out of the publication of materially false and defamatory short-seller research reports targeting RGC's publicly traded common stock (NASDAQ: RDGM). Over the course of the past eleven months, this matter has demanded sustained and rigorous effort from both our engagement team and the RGC team, and we are pleased that the effort has culminated in a favorable resolution for the Company. The settlement secures a total monetary recovery of $14.75 million, negotiated corrective statements that publicly acknowledge the material inaccuracies in the defendants' reports, and a stipulated permanent injunction that bars the defendants from republishing the reports or trading in RDGM securities for a period of five years. This result reflects both the strength of RGC's claims and the collaborative, strategic approach that both teams brought to the litigation from its inception.
The purpose of this letter is to ensure that you and the broader RGC leadership team have a comprehensive record of the matter's resolution, the outstanding post-settlement obligations that require continued attention, and the firm's procedures with respect to the matter file going forward.
2. Summary of Settlement Outcome
For the record and for the convenience of the RGC team, we summarize below the key terms of the Settlement Agreement executed on January 6, 2025 (the "Effective Date"). This summary is provided for reference only and is qualified in its entirety by the terms of the Settlement Agreement itself, a conformed copy of which is enclosed with this letter.
Monetary Recovery. The settlement provides for a total monetary recovery of $14,750,000.00. This amount is funded from two sources: (i) $10,250,000.00 from Ironclad Surety & Insurance Co. ("Ironclad"), payable under Directors & Officers / Media Liability Policy No. ML-2023-07714 issued to Grizzly Peak Research LLC ("GPR"); and (ii) $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP ("GPCP"), jointly and severally. The allocation between the insured and uninsured portions of the settlement was the product of extensive negotiation with both defense counsel at Caldwell, Tseng & Barrow LLP and Ironclad's coverage counsel, and reflects the scope of covered and uncovered claims asserted in the litigation.
Corrective Statements. GPR is required to publish a Corrective Publication of not fewer than 1,500 words on its website, grizzlypeakresearch.com, acknowledging material inaccuracies contained in the three research reports that formed the basis of RGC's claims — specifically, the reports titled "House of Cards" (published March 14, 2024), "Rigged Reels" (published April 22, 2024), and "Double Down on Fraud" (published June 3, 2024). The text of the Corrective Publication was negotiated by the parties and is attached as Exhibit C to the Settlement Agreement. In addition, GPR is required to post a summary corrective statement of not fewer than 280 characters on the @GrizzlyPeakRes social media account (on the Westvale Solutions platform), which must include a hyperlink to the full Corrective Publication on grizzlypeakresearch.com. Both corrective statements are required to remain posted and publicly accessible for a period of not less than twenty-four (24) months from the date of initial posting.
Permanent Injunction. The defendants — GPR, GPCP, and Tobias Fenchurch, individually — are permanently enjoined from republishing, reposting, redistributing, or otherwise disseminating the three reports identified above, or any statements that are substantially similar in content or import to the statements contained in those reports regarding RGC, its officers, directors, operations, or financial condition. In addition, the defendants are subject to a five-year bar on trading, directly or indirectly, in RDGM securities, including common stock, options, and any other derivative instruments. The trading bar runs from the Effective Date through January 6, 2030. The stipulated permanent injunction will be submitted to the court for entry as described in Section 3.3 below, and the court retains jurisdiction to enforce its terms.
Mutual Releases. The Settlement Agreement provides for broad mutual releases by and between the parties, releasing all claims, known and unknown, arising out of or related to the subject matter of the litigation, including a waiver of the protections of California Civil Code § 1542. The mutual releases contain express carve-outs for any claims arising from a breach of, or failure to perform obligations under, the Settlement Agreement itself.
Non-Disparagement. The parties have agreed to a mutual non-disparagement clause with a term of three (3) years. As measured from the Effective Date of January 6, 2025, the non-disparagement obligation expires on January 6, 2028. During this period, neither party shall make, publish, or cause to be made or published any disparaging statements regarding the other party, its officers, directors, employees, or affiliates in connection with the matters at issue in the litigation. The non-disparagement clause is subject to customary exceptions for truthful statements required by law, regulation, or legal process.
Confidentiality. The specific monetary amount of the settlement is confidential under the terms of the Settlement Agreement, and neither party may disclose the settlement amount except as required by law, regulation, or applicable securities disclosure obligations. Notably, the existence of the settlement and the content of the corrective statements are expressly excluded from the confidentiality restriction, permitting RGC to reference the settlement and the corrective statements publicly, including in communications with investors, regulators, and the media.
Dismissal. The parties have agreed to a stipulated dismissal with prejudice of all claims and counterclaims. The court will retain jurisdiction to enforce the terms of the Settlement Agreement pursuant to California Code of Civil Procedure § 664.6, which permits the court to enter judgment upon motion of a party in the event of a breach or dispute regarding the settlement terms. This retained jurisdiction provides RGC with a streamlined enforcement mechanism should any issues arise with the defendants' compliance with their post-settlement obligations.
3. Remaining Action Items and Key Deadlines
Although the matter file is being closed for purposes of active litigation management, several post-settlement obligations and associated deadlines remain outstanding. Calderwood & Harkness flags each of these items for RGC's attention and ongoing monitoring. We strongly recommend that you calendar each of the dates identified below and assign responsibility within the RGC organization for confirming compliance.
3.1 Corrective Publication Posting — Target Deadline: January 13, 2025
Under Section 5.2 of the Settlement Agreement, GPR is required to post the Corrective Publication on grizzlypeakresearch.com within five (5) business days of the Effective Date. The Effective Date is January 6, 2025, which means the deadline for posting is January 13, 2025. GPR is also required to post the summary social media corrective statement on the @GrizzlyPeakRes account on the Westvale Solutions platform by the same deadline, with a functioning hyperlink to the full text of the Corrective Publication.
We recommend that RGC designate one or more individuals to monitor grizzlypeakresearch.com and the @GrizzlyPeakRes social media account to confirm timely posting. In particular, we suggest that Janelle Hu, Vice President, Investor Relations, and/or the crisis-communications team at Crestline Equity Partners Group Inc., led by Simone Arecchi, who has been closely involved in the Company's public messaging throughout this matter, undertake this monitoring function. Confirmation should include screenshots or other contemporaneous documentation of the postings, including timestamps, to preserve evidence of compliance in the event of any future dispute.
If the corrective statements have not been posted by the close of business on January 13, 2025, or if the statements as posted are materially deficient relative to the text agreed upon in Exhibit C to the Settlement Agreement, please notify Calderwood & Harkness immediately. In such circumstances, we would be prepared to initiate enforcement proceedings under the court's retained jurisdiction pursuant to California Code of Civil Procedure § 664.6, and/or to seek contempt sanctions in connection with the stipulated permanent injunction once entered.
Additionally, the Corrective Publication is required to remain posted and publicly accessible for a minimum period of twenty-four (24) months from the date of initial posting, through approximately January 2027. We recommend periodic spot-checks throughout that period, as discussed further in Section 3.4 below.
3.2 Escrow Deposit — Deadline: February 5, 2025
Under Section 4.1 of the Settlement Agreement, all settlement funds totaling $14,750,000.00 are to be deposited into escrow at Great Basin Trust Company, N.A., located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, NV 89169, within thirty (30) calendar days of the Effective Date. This deadline falls on February 5, 2025.
The escrow deposit will be funded from two sources:
(a) $10,250,000.00 from Ironclad Surety & Insurance Co., payable under D&O/Media Liability Policy No. ML-2023-07714; and
(b) $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP, jointly and severally.
Wire transfer instructions have been provided to Great Basin Trust Company, N.A. by our office, and confirmed by the escrow officer assigned to the matter. Calderwood & Harkness will coordinate with defense counsel Raymond Caldwell and Natalie Orenstein at Caldwell, Tseng & Barrow LLP, and with Daniel Royce, Claims Examiner at Ironclad Surety, to confirm timely remittance of both funding components. We will notify you promptly upon confirmation that all funds have been received into escrow.
Following receipt and clearance of the escrowed funds, the disbursement process will proceed in accordance with the escrow instructions executed by the parties. We anticipate that the net proceeds, after satisfaction of any applicable escrow fees and costs, will be available for disbursement to RGC within approximately five (5) business days of full funding.
3.3 Filing of Stipulated Dismissal with Prejudice — Target: February 19, 2025
Under Section 7.1 of the Settlement Agreement, the Stipulation and Proposed Order for Dismissal with Prejudice is to be filed with the Superior Court of California, County of Los Angeles, before the Honorable Judge Patricia Yamamoto (Department 51), within ten (10) business days of the full funding of the escrow deposit. Assuming timely funding by February 5, 2025, the filing deadline falls on approximately February 19, 2025.
Concurrently with the filing of the stipulated dismissal, we will submit the Stipulation and Proposed Order for Entry of Permanent Injunction, which will formalize the injunctive provisions of the Settlement Agreement as an order of the court. Entry of the permanent injunction as a court order is important because it provides RGC with the ability to seek enforcement through contempt proceedings in the event of any future violation by the defendants.
Calderwood & Harkness will handle all aspects of the filing, including coordination with defense counsel on the execution of the stipulations and the submission of proposed orders to the court. We will provide RGC with conformed copies of all filed documents promptly upon entry by the court.
3.4 Ongoing Compliance Monitoring
Beyond the immediate post-settlement deadlines described above, RGC should establish a process for periodic monitoring of the defendants' compliance with their ongoing obligations under the Settlement Agreement and the permanent injunction. Specifically, we recommend that RGC confirm on a regular basis (quarterly, at a minimum) the following:
(a) Corrective Statements (through approximately January 6, 2027): The corrective statements — both the full Corrective Publication on grizzlypeakresearch.com and the summary social media corrective on @GrizzlyPeakRes — remain posted and publicly accessible for the full twenty-four (24) month period. Any removal, alteration, or de-indexing of the corrective statements prior to the expiration of the posting period would constitute a breach of the Settlement Agreement.
(b) Non-Disparagement (through January 6, 2028): The defendants comply with the mutual non-disparagement clause throughout the three-year term. This includes monitoring for public statements, publications, social media posts, interviews, or other communications by GPR, GPCP, Tobias Fenchurch, or their agents that could be construed as disparaging RGC, its officers, directors, employees, or affiliates in connection with the subject matter of the litigation.
(c) Securities Trading Injunction (through January 6, 2030): The defendants comply with the five-year bar on trading in RDGM securities. While direct monitoring of trading activity is inherently difficult, RGC's compliance and investor relations teams should remain alert to any indications of non-compliance, including unusual trading patterns, public disclosures, or regulatory filings that might suggest the defendants or their affiliates are transacting in RDGM securities or derivatives.
Any suspected violations of the Settlement Agreement or the permanent injunction should be reported to Calderwood & Harkness or, if another firm has been engaged as successor counsel for enforcement purposes, to that firm. As noted in Section 6 below, Calderwood & Harkness would be pleased to assist with any enforcement proceedings under a new or supplemental engagement.
4. Billing Summary
A detailed Final Billing Memorandum has been separately transmitted by Samuel Eklund, the Billing Partner for this engagement, directly to you under separate cover. For completeness, and to provide a summary record within this correspondence, we note the following key figures:
Total Hours Billed: Approximately 3,420 hours across the engagement team, consisting of Francesca Morano (Partner), Samuel Eklund (Partner), Carlos Espinoza (Senior Associate), and Hannah Brinkley (Associate).
Total discounted Fees: Approximately $2,800,623.00, reflecting the application of the 15% discount from standard hourly rates that was agreed upon in the engagement letter dated February 5, 2024 (i.e., fees billed at 85% of the firm's standard rates).
Success Premium: Approximately $420,093.00, reflecting the 15% success premium triggered by the execution of the Settlement Agreement, as contemplated by Section 6(b) of the engagement letter. The success premium was structured as 15% of the total discounted fees and is payable upon the successful resolution of the matter through settlement or judgment.
Total Engagement Fees: Approximately $3,220,716.00 (Discounted fees plus success premium).
Costs Advanced by the Firm: $187,450.00, representing costs advanced by Calderwood & Harkness on behalf of RGC during the course of the engagement, including expert witness fees (principally Dr. Elena Vostrikova at Meridian Forensic Economics LLC), deposition transcript costs (covering all fourteen depositions taken during the course of the litigation), and e-discovery vendor charges (for document hosting, processing, and review platform licensing).
Grand Total: Approximately $3,408,166.00.
All amounts are set forth in greater detail in the Final Billing Memorandum and the supporting invoice summaries transmitted by Mr. Eklund. We respectfully request confirmation that all outstanding invoices have been processed or will be processed in due course in accordance with the payment terms set forth in the engagement letter. Please do not hesitate to contact Mr. Eklund directly with any questions regarding the billing summary or individual invoices.
5. Document Retention Policy
With the closure of the matter file, Calderwood & Harkness's standard document retention policy will apply to all materials in the firm's possession related to Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al. We describe that policy below for your information.
Retention Period. The firm will retain the complete matter file, encompassing both physical and electronic records, for a period of seven (7) years from the date of matter closure. This retention period is consistent with the requirements of the applicable California Rules of Professional Conduct, the State Bar of California's guidelines on file retention, and the firm's internal retention schedule. For purposes of this matter, the date of matter closure will be deemed to be the date on which the stipulated dismissal with prejudice is entered by the court, which we anticipate will occur on or about February 19, 2025, or shortly thereafter.
Scope of Retained Materials. The matter file to be retained includes, without limitation, the following categories of materials:
(a) All pleadings, motions, briefs, and supporting declarations filed in the litigation;
(b) All court orders, minute orders, rulings, and related correspondence with the court;
(c) All correspondence between Calderwood & Harkness and RGC, defense counsel, third parties, and other participants in the litigation;
(d) All internal memoranda, research memoranda, strategy memoranda, and attorney work product prepared in connection with the matter;
(e) All discovery materials, including the approximately 87,000 documents produced in discovery by the parties and third parties, interrogatory responses, requests for admission responses, and related correspondence;
(f) All deposition transcripts from the fourteen (14) depositions taken during the course of the litigation, together with exhibits thereto and any video recordings;
(g) All expert reports and related materials, including Dr. Elena Vostrikova's event-study analysis and damages report prepared on behalf of RGC through Meridian Forensic Economics LLC, and the defendants' rebuttal expert materials;
(h) All settlement-related documents, including the Settlement Agreement and Mutual Release, the Corrective Publication text, escrow instructions, and related correspondence; and
(i) All billing records, time entries, invoices, and engagement-related financial records.
Destruction Following Retention Period. Following the expiration of the seven-year retention period, the firm will destroy all materials in the matter file — including both physical and electronic records — in accordance with its standard procedures, unless RGC has provided written instructions to the contrary prior to the scheduled destruction date. We will endeavor to provide advance notice to RGC prior to the scheduled destruction, but we urge you to calendar the approximate destruction date (seven years from the date of matter closure, or approximately February 2032) and to contact the firm in advance if you wish to extend the retention period or arrange for the return or transfer of the file.
Client Property. Original documents and materials provided by RGC to Calderwood & Harkness during the course of the engagement, together with any other property belonging to the client, will be returned upon request at any time. Additionally, RGC may request the return of all client materials, or a complete copy of the matter file, at any time during the retention period. Any such request should be directed to the undersigned or to Mr. Eklund in writing. Please note that the firm may charge reasonable costs for the reproduction and shipment of voluminous materials, particularly with respect to the electronic discovery database, which contains approximately 87,000 documents.
We advise you to notify the firm in writing if RGC wishes to have any or all materials returned or transferred to successor counsel. In the absence of such instructions, the firm will retain the materials in accordance with the retention schedule described above.
Privileged and Confidential Materials. We remind you that the matter file contains substantial volumes of attorney-client privileged communications and attorney work product, including strategy memoranda, legal research, draft pleadings, and internal correspondence between the engagement team and RGC's in-house legal department. If any materials from the file are returned to RGC or transferred to another law firm, appropriate safeguards should be maintained to preserve the privileged and confidential nature of those materials. Inadvertent disclosure of privileged materials to third parties could result in waiver of the attorney-client privilege, which could have significant consequences for RGC in the event of any future related proceedings.
Destruction of materials at the end of the retention period will be handled by the firm in a manner consistent with the confidential nature of the materials, including secure shredding of physical documents and certified deletion of electronic files.
6. Termination of Active Representation
Upon the completion of the remaining post-settlement filings described in Section 3 above — specifically, the filing of the Stipulation and Proposed Order for Dismissal with Prejudice and the Stipulation and Proposed Order for Entry of Permanent Injunction — Calderwood & Harkness's active representation of Redstone Gaming Corp. in this matter will conclude. At that point, the firm will have no further obligations to take any action on behalf of RGC in connection with Case No. 24STCV-01892, except as may be separately agreed.
Please be advised that, following the conclusion of active representation, the firm does not undertake any continuing obligation to monitor legal developments, regulatory changes, judicial decisions, or compliance matters related to the subject matter of this litigation, beyond the specific action items and deadlines identified in Section 3 of this letter. Similarly, the firm does not assume any ongoing obligation to monitor the defendants' compliance with the Settlement Agreement, the permanent injunction, or the non-disparagement clause. Responsibility for ongoing compliance monitoring will rest with RGC's in-house legal team, or with any successor counsel that RGC may engage for that purpose.
That said, should any enforcement issues arise under the Settlement Agreement — including, by way of example, the defendants' failure to timely post or maintain the corrective statements, any breach of the non-disparagement clause, or any violation of the securities trading injunction — RGC should not hesitate to contact the firm. Calderwood & Harkness would be pleased to assist with enforcement proceedings or related matters under a new or supplemental engagement letter, and the institutional knowledge and familiarity with the matter that our team has developed would allow us to respond efficiently to any such issues.
Finally, we wish to make clear that the closure of this matter pertains solely to Case No. 24STCV-01892 in the Superior Court of California, County of Los Angeles, and does not affect any other existing or future engagements between Calderwood & Harkness LLP and Redstone Gaming Corp. or its affiliates. Any separate matters in which the firm is currently engaged on behalf of RGC will continue in the ordinary course.
7. Acknowledgments and Closing Remarks
In closing, we wish to express our sincere appreciation for the trust and confidence that Redstone Gaming Corp. has placed in Calderwood & Harkness LLP throughout this engagement. This matter presented significant factual, legal, and strategic complexities, and we are grateful for the close collaboration and responsiveness of the RGC team at every stage. We extend particular thanks to Marcus J. Calloway, Chief Executive Officer, for his leadership and commitment to pursuing the Company's claims; to you, Derek, for your superb guidance and judgment as General Counsel in managing the litigation from the client side; to Priya Ramaswaran, Chief Financial Officer, for her invaluable assistance in assembling the financial data and analyses that supported the Company's damages case; and to Janelle Hu, Vice President, Investor Relations, for her tireless efforts in coordinating investor communications and managing market-facing disclosures during what was an extraordinarily challenging period for the Company.
We also wish to acknowledge the contributions of the broader team of advisors whose collaborative efforts were instrumental to the successful outcome of this matter. The forensic audit rebuttal prepared by Walter Ng and his team at Pinnacle Audit & Advisory LLP was central to dismantling the defendants' false allegations regarding RGC's financial reporting. The crisis communications strategy developed and executed by Simone Arecchi and her team at Crestline Equity Partners Group Inc. played a critical role in preserving investor confidence and managing public perception throughout the litigation. The team at Hargrove & Sato LLP, who handled the parallel Nevada gaming regulatory inquiries triggered by the defendants' reports, ensured that RGC's gaming licenses and regulatory standing were fully protected. And the expert damages analysis prepared by Dr. Elena Vostrikova at Meridian Forensic Economics LLC — including her event-study quantifying the stock-price impact of each of the three reports — provided the rigorous economic foundation that ultimately compelled the defendants and their insurer to agree to the settlement terms achieved.
The result obtained in this matter is significant by any measure: a monetary recovery of $14.75 million; public vindication of RGC through corrective statements that acknowledge the material inaccuracies in the defendants' reports; and permanent injunctive protections that prevent the defendants from republishing those reports or trading in RDGM securities for five years. This outcome reflects the strength of the Company's position and the dedication of everyone involved.
We are proud to have served as RGC's counsel in this matter, and we reiterate that Calderwood & Harkness stands ready to assist Redstone Gaming Corp. with any future legal needs, whether related to this matter or otherwise. Please do not hesitate to reach out at any time.
With warm regards,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano Partner
333 South Grand Avenue, Suite 4800 Los Angeles, CA 90071 Direct: (213) 555-8217
Email: fmorano@calderwoodharkness.com
cc:
Marcus J. Calloway, Chief Executive Officer, Redstone Gaming Corp. Priya Ramaswaran, Chief Financial Officer, Redstone Gaming Corp. Janelle Hu, Vice President, Investor Relations, Redstone Gaming Corp. Samuel Eklund, Partner, Calderwood & Harkness LLP Carlos Espinoza, Senior Associate, Calderwood & Harkness LLP Hannah Brinkley, Associate, Calderwood & Harkness LLP
Enclosures:
(1) Conformed copy of the executed Settlement Agreement and Mutual Release (dated January 6, 2025) (2) Final Billing Summary (separately transmitted under cover of Samuel Eklund's memorandum of January 14, 2025)

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