CALDERWOOD & HARKNESS LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071

CALDERWOOD & HARKNESS LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071
INTERNAL MEMORANDUM PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Francesca Morano, Responsible Partner, Calderwood & Harkness LLP
FROM: Samuel Eklund, Billing Partner, Calderwood & Harkness LLP
DATE: January 2025
RE: Calculation of Success Premium — Redstone Gaming Corp. v. Grizzly Peak Research LLC et al., Case No. 24STCV-01892 (Superior Court of California, County of Los Angeles)
MATTER NO.: 1033-00006
COPIES: Carlos Espinoza, Hannah Brinkley (for file)
I. PURPOSE
This memorandum documents the calculation of the fifteen percent (15%) success premium payable to Calderwood & Harkness LLP (the "Firm") under the terms of the engagement letter dated February 5, 2024 (the "Engagement Letter"), entered into between the Firm and Redstone Gaming Corp. (the "Client"). The success premium is a component of the modified hourly fee arrangement governing the Firm's representation of the Client in the above-captioned litigation.
The premium has been triggered by the successful settlement reached with Grizzly Peak Research LLC ("GPR"), Grizzly Peak Capital Partners LP ("GPCP"), and Tobias Fenchurch (collectively, "Defendants") on December 4, 2024, at the conclusion of a two-day mediation before the Honorable Gerald K. Matsuda (Ret.). The settlement-in-principle was memorialized in a binding Mediator's Term Sheet executed by all parties on December 4, 2024, and was subsequently formalized in the Settlement Agreement and Mutual Release (the "Settlement Agreement") executed on January 6, 2025 (the "Effective Date").
This memorandum is prepared for internal Firm records and serves as a supporting document for the Final Billing Memorandum to be transmitted to the Client's General Counsel, Derek Olafson. All calculations set forth herein are based on the Firm's contemporaneous time records maintained in the ordinary course, invoices rendered during the engagement period, and the terms of the Engagement Letter. The memorandum is intended to provide a clear and auditable record of the premium computation, facilitate reconciliation with monthly invoices previously submitted to the Client, and support the Firm's final invoice.
II. TRIGGERING EVENT — CONFIRMATION OF "SUCCESSFUL SETTLEMENT"
A. Fee Arrangement Terms
The fee arrangement governing the Firm's representation of the Client is set forth in the Engagement Letter dated February 5, 2024, which was executed by Francesca Morano on behalf of Calderwood & Harkness LLP in her capacity as Responsible Partner and countersigned by Derek Olafson, Executive Vice President and General Counsel of Redstone Gaming Corp., on behalf of the Client.
Under the Engagement Letter, the Firm agreed to a modified hourly fee arrangement structured as follows:
(a) discounted Hourly Rates. During the pendency of the litigation, the Firm would bill professional fees at eighty-five percent (85%) of each timekeeper's standard hourly rate (the "Discounted Rate"). The standard hourly rates for each timekeeper assigned to the matter were specified in Schedule A to the Engagement Letter and are set forth in Section III.A of this memorandum.
(b) Success Premium. In the event of a "Successful Settlement or Judgment" (as defined below), the Client agreed to pay the Firm an additional premium equal to fifteen percent (15%) of the aggregate discounted professional fees billed during the engagement period (the "Success Premium"). The Success Premium effectively restores the Firm's fees to their full standard rates and compensates the Firm for the risk associated with the discounted billing arrangement.
(c) Definition of Triggering Condition. Section 4(c) of the Engagement Letter defines a "Successful Settlement or Judgment" as:
"any negotiated resolution, consent judgment, or adjudicated result that (i) results in a monetary recovery to the Client in excess of $5,000,000, or (ii) includes material non-monetary relief, including but not limited to injunctive relief, corrective publications, or trading restrictions imposed upon any Defendant, or (iii) any combination of monetary and non-monetary relief that the Responsible Partner, in her reasonable professional judgment, determines constitutes a favorable outcome for the Client."
As demonstrated below, the settlement achieved in this matter satisfies all three prongs of this definition.
B. Settlement Outcome
Following extensive litigation conducted over approximately ten months — including substantial written discovery, the production and review of approximately 87,000 documents, fourteen depositions, contested motions practice (including the Client's successful motion for preliminary injunction and the Defendants' unsuccessful anti-SLAPP motion), and engagement of expert witnesses — the parties participated in a two-day mediation session on December 3–4, 2024, before the Honorable Gerald K. Matsuda (Ret.) at Westside Mediation Center in Los Angeles, California.
At the conclusion of the second day of mediation, the parties reached a settlement-in-principle, the material terms of which were memorialized in a binding Mediator's Term Sheet signed by all parties and counsel on December 4, 2024. The settlement was subsequently formalized in the Settlement Agreement and Mutual Release, which was fully executed by all parties on January 6, 2025 (the "Effective Date").
The material terms of the settlement constituting a "Successful Settlement" under the Engagement Letter are as follows:
1. Monetary Payment
The Defendants and their insurer agreed to pay Redstone Gaming Corp. a total of Fourteen Million Seven Hundred Fifty Thousand Dollars ($14,750,000.00), allocated as follows:
(i) $10,250,000.00 from Ironclad Surety & Insurance Co., payable under Policy No. ML-2023-07714 (Media Liability and Errors & Omissions Policy), to be paid by wire transfer within thirty (30) calendar days of the Effective Date; and
(ii) $4,500,000.00 from GPR and GPCP, jointly and severally, to be paid by wire transfer within forty-five (45) calendar days of the Effective Date.
The aggregate monetary recovery of $14,750,000.00 substantially exceeds the $5,000,000 threshold specified in clause (i) of the Engagement Letter's definition of "Successful Settlement or Judgment."
2. Corrective Publication
GPR agreed to publish a Corrective Publication of not fewer than 1,500 words on its website, grizzlypeakresearch.com, within five (5) business days of the Effective Date. The Corrective Publication must acknowledge material inaccuracies contained in all three of the research reports at issue in the litigation — specifically, the reports titled "RDGM: A House of Cards" (published March 15, 2023), "RDGM: The Deeper Dig" (published April 22, 2023), and "RDGM: Final Warning" (published June 8, 2023). The Corrective Publication must remain posted on the website in a prominent and readily accessible location for a period of not less than twenty-four (24) months from the date of initial publication.
3. Social Media Corrective Statement
GPR further agreed to publish a corrective statement of not fewer than 280 characters on its official social media account, @GrizzlyPeakRes, on the same platform(s) where the original reports were promoted. The social media corrective statement must include a hyperlink to the full Corrective Publication on grizzlypeakresearch.com and must remain posted for the same twenty-four (24) month period.
4. Stipulated Permanent Injunction and Trading Bar
The parties agreed to a stipulated permanent injunction, to be entered by the Superior Court, which:
(i) permanently bars GPR, GPCP, Tobias Fenchurch, and their agents, affiliates, and successors from republishing, redistributing, or otherwise disseminating the three research reports identified above, or any substantially similar statements concerning Redstone Gaming Corp. or its securities; and
(ii) imposes a five-year bar on GPR, GPCP, and Tobias Fenchurch from trading, directly or indirectly, in RDGM securities, including common stock, options, futures, swaps, or any derivative instruments referencing RDGM, effective through January 6, 2030.
5. Additional Terms
The Settlement Agreement further provides for:
(i) Mutual Releases. Broad mutual releases of all claims, counterclaims, cross-claims, and causes of action, whether known or unknown, arising out of or related to the facts and circumstances alleged in the litigation, with an express waiver of California Civil Code Section 1542;
(ii) Non-Disparagement. A three-year mutual non-disparagement clause, effective from the Effective Date through January 6, 2028, prohibiting each party from making public statements that are materially disparaging of any other party; and
(iii) Stipulated Dismissal with Prejudice. Filing of a stipulated dismissal with prejudice of all claims and counterclaims within ten (10) business days of receipt of the full monetary payment.
6. Conclusion Regarding Triggering Condition
Based on the foregoing, the settlement unambiguously qualifies as a "Successful Settlement" under Section 4(c) of the Engagement Letter. The settlement satisfies all three independent prongs of the definition: (i) the monetary recovery of $14,750,000.00 exceeds the $5,000,000 threshold; (ii) the settlement includes substantial non-monetary relief, including corrective publications, a stipulated permanent injunction, and a five-year trading bar; and (iii) the Responsible Partner, Francesca Morano, has confirmed in her reasonable professional judgment that the settlement constitutes a highly favorable outcome for the Client. Accordingly, the fifteen percent (15%) Success Premium is triggered and is due and payable by the Client.
III. AGGREGATE DISCOUNTED FEES — COMPUTATION
A. Billing Rate Structure
The following table sets forth the standard hourly rates and corresponding discounted rates (at 85% of standard) for each timekeeper assigned to the matter during the engagement period. These rates are consistent with Schedule A to the Engagement Letter and with the rates reflected on all monthly invoices rendered to the Client during the engagement period:
All timekeepers billed at the discounted Rate throughout the entirety of the engagement period. No rate adjustments or increases were applied during the engagement period, consistent with the terms of the Engagement Letter, which fixed rates for the duration of the matter.
B. Hours Billed by Timekeeper (February 2024 – January 2025)
The following table presents the total hours billed by each timekeeper over the full engagement period (February 5, 2024, through January 2025), along with each timekeeper's aggregate discounted fee computation. Hours are derived from the Firm's contemporaneous time records as maintained in the Firm's billing system and reconciled against the monthly invoices rendered to the Client:
The total hours billed across the engagement period amount to approximately 3,420 hours of professional time. The distribution of hours reflects the staffing model employed throughout the litigation: Francesca Morano, as Responsible Partner, provided overall strategic direction, managed the client relationship, and argued key motions; Samuel Eklund managed billing, staffing, and litigation logistics, and took and defended several depositions; Carlos Espinoza, as Lead Associate, handled the bulk of day-to-day litigation tasks including discovery, motion drafting, deposition preparation, and expert coordination; and Hannah Brinkley provided substantial support across all phases of the engagement, with particular emphasis on document review, discovery responses, and legal research.
C. Total Aggregate discounted Fees
The sum of the individual timekeeper fee totals yields the Aggregate discounted Fees for the engagement:
$608,068.75 (Morano) + $375,487.50 (Eklund) + $1,049,835.00 (Espinoza) + $767,231.25 (Brinkley) = $2,800,622.50
Rounded to the nearest dollar: $2,800,623.
This figure represents the total professional fees billed at the 85% discounted Rate over the full engagement period, from February 5, 2024, through January 2025. This amount has been reconciled against the cumulative total of all monthly invoices rendered to the Client during the engagement period and is confirmed to be accurate.
IV. SUCCESS PREMIUM CALCULATION
A. Premium Formula
Pursuant to Section 4(b) of the Engagement Letter, the Success Premium is calculated as fifteen percent (15%) of the Aggregate discounted Fees billed during the engagement period. The computation is as follows:
Success Premium = 15% × Aggregate discounted Fees
Success Premium = 0.15 × $2,800,622.50
Success Premium = $420,093.38
Rounded to the nearest dollar: $420,093.
It is worth noting that the combined effect of the 85% discounted billing during the engagement period and the subsequent 15% Success Premium is economically designed to restore the Firm's aggregate fees to approximately the level that would have been billed at full standard rates if the Client had achieved a successful outcome, while providing the Client with meaningful rate relief in the event the litigation did not result in a favorable resolution. The Success Premium of $420,093 represents the difference between the discounted fees actually billed and the fees that would have been billed at full standard rates, adjusted by the 15% multiplier applied to the discounted base rather than the standard base.
B. Total Engagement Fees (Discounted Fees + Premium)
The total professional fees for the engagement, inclusive of the Success Premium, are computed as follows:
Aggregate discounted Fees: $2,800,623
Success Premium (15%): $420,093
Total Engagement Fees: $3,220,716
This figure reflects the Firm's total professional fee entitlement for the engagement, exclusive of costs advanced on behalf of the Client, which are addressed separately in Section V below.
V. COSTS ADVANCED
In addition to the professional fees set forth above, Calderwood & Harkness LLP advanced costs on behalf of the Client during the engagement period totaling $187,450.00. These costs were incurred in the ordinary course of the litigation and are reimbursable by the Client in full pursuant to Section 6 of the Engagement Letter, which provides that the Client shall reimburse the Firm for all reasonable out-of-pocket costs and disbursements incurred in connection with the representation.
The principal categories of costs advanced are as follows:
(a) Expert Fees. Fees for the engagement of Meridian Forensic Economics LLC, through its principal, Dr. Elena Vostrikova, Ph.D. Dr. Vostrikova was retained to perform an event-study analysis quantifying the impact of the Defendants' allegedly defamatory research reports on the trading price of RDGM common stock and to prepare a comprehensive damages report for use at trial and in mediation. Dr. Vostrikova's engagement encompassed data collection and analysis, preparation of an expert report, review of opposing expert materials, preparation for and attendance at deposition, and attendance at the two-day mediation. Her fees constitute the single largest component of advanced costs.
(b) Deposition Transcript Costs. Costs for stenographic and, where applicable, videographic recording and transcription of fourteen (14) depositions taken during the discovery phase of the litigation between June and November 2024. Deponents included Tobias Fenchurch (two sessions), three GPR research analysts, two GPCP portfolio managers, the GPCP compliance officer, the Ironclad Surety claims adjuster, three Redstone Gaming Corp. executives (including CEO Martin Quaid and CFO Priya Chandrasekaran), and Dr. Vostrikova (opposing counsel's examination).
(c) E-discovery Vendor Charges. Charges for the processing, hosting, and technology-assisted review of the document productions in the litigation. The Firm engaged a third-party e-discovery vendor to process and host approximately 87,000 documents produced by the parties during the discovery phase, including documents produced by GPR, GPCP, Tobias Fenchurch, and certain third parties pursuant to subpoena. Charges include data ingestion, processing, hosting, and technology-assisted review platform licensing.
A detailed itemization of all costs advanced is set forth in the Final Billing Memorandum and supporting cost ledger. The aggregate amount of $187,450.00 is confirmed as accurate and reimbursable under the terms of the Engagement Letter.
VI. GRAND TOTAL DUE FROM CLIENT
The following table summarizes the total amount due from the Client, encompassing all professional fees, the Success Premium, and costs advanced:
This Grand Total of $3,408,166.00 will be reflected in the Final Billing Memorandum prepared for transmittal to Derek Olafson, Executive Vice President and General Counsel, Redstone Gaming Corp. The Grand Total is subject to credit for any outstanding payments previously received from the Client against monthly invoices rendered during the engagement period. Any such credits will be identified and applied in the Final Billing Memorandum, and the net amount due will be invoiced accordingly.
VII. RECONCILIATION AND CROSS-REFERENCES
The calculations set forth in this memorandum should be read in conjunction with, and are supported by, the following documents:
1.  Final Billing Memorandum / Fee Summary (prepared by Samuel Eklund, January 2025). This companion document provides detailed monthly billing breakdowns by timekeeper for each month of the engagement period, reconciles all monthly invoices rendered to the Client, identifies payments received, and presents the net balance due inclusive of the Success Premium and costs advanced.
2.  Engagement Letter dated February 5, 2024, Section 4 (Fee Arrangement). This section constitutes the contractual basis for the modified hourly fee arrangement, the 85% discounted rate structure, and the 15% Success Premium. Subsection 4(b) specifies the premium formula, and Subsection 4(c) defines the triggering condition of "Successful Settlement or Judgment."
3.  Settlement Agreement and Mutual Release dated January 6, 2025. This agreement constitutes the formal memorialization of the settlement and serves as definitive evidence of the triggering event for the Success Premium. The Settlement Agreement was fully executed by all parties and their respective counsel on the Effective Date.
4.  Mediator's Term Sheet dated December 4, 2024. This document constitutes the initial binding memorialization of the settlement terms reached at the conclusion of the two-day mediation before the Honorable Gerald K. Matsuda (Ret.). The Mediator's Term Sheet was signed by all parties and counsel and was expressly designated as binding and enforceable.
It is further noted, for purposes of reconciliation, that all invoices submitted to the Client during the engagement period reflected the 85% discounted Rate for each timekeeper. No invoices rendered during the engagement period included any component of the Success Premium. The Success Premium of $420,093.00 represents the full 15% balance that is now due upon satisfaction of the triggering condition — namely, the execution of the Settlement Agreement on January 6, 2025. Accordingly, there is no risk of duplication or double-billing, and the Client has not previously been invoiced for any portion of the Success Premium.
VIII. CONCLUSION
Based on the analysis set forth in this memorandum, the fifteen percent (15%) Success Premium of approximately $420,093.00 is properly calculated and is due and payable by Redstone Gaming Corp. under the terms of the Engagement Letter dated February 5, 2024. The triggering condition — a "Successful Settlement or Judgment" — has been unambiguously satisfied by the execution of the Settlement Agreement and Mutual Release on January 6, 2025, which provides the Client with $14,750,000.00 in monetary relief, corrective publications, a stipulated permanent injunction, and a five-year trading bar, among other favorable terms.
It is recommended that the Success Premium be invoiced together with any outstanding monthly billing balances and cost reimbursement amounts in a single consolidated final invoice to Redstone Gaming Corp. The final invoice should be transmitted to Derek Olafson, Executive Vice President and General Counsel, accompanied by the Final Billing Memorandum and a summary of this computation.
A copy of this memorandum will be maintained in the matter file (Matter No. 1033-00006) and appended to the final billing records for the engagement.
PREPARED BY:
SAMUEL EKLUND Billing Partner Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071
Date: ______
This memorandum is a privileged and confidential internal communication of Calderwood & Harkness LLP, prepared as attorney work product. It is not intended for distribution to any person or entity outside of the Firm without the prior written approval of the Responsible Partner. Unauthorized disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited.
Timekeeper | Role | Standard Rate | discounted Rate (85%)
Francesca Morano | Responsible Partner | $1,475.00/hr | $1,253.75/hr
Samuel Eklund | Billing Partner | $1,425.00/hr | $1,211.25/hr
Carlos Espinoza | Lead Associate | $895.00/hr | $760.75/hr
Hannah Brinkley | Working Associate | $725.00/hr | $616.25/hr
Timekeeper | Hours | discounted Rate | Total Fees
Francesca Morano | 485.0 hrs | $1,253.75/hr | $608,068.75
Samuel Eklund | 310.0 hrs | $1,211.25/hr | $375,487.50
Carlos Espinoza | 1,380.0 hrs | $760.75/hr | $1,049,835.00
Hannah Brinkley | 1,245.0 hrs | $616.25/hr | $767,231.25
TOTALS | 3,420.0 hrs | $2,800,622.50
Component | Amount
Aggregate discounted Fees | $2,800,623.00
Success Premium (15%) | $420,093.00
Costs Advanced | $187,450.00
Grand Total | $3,408,166.00