letter-ironclad-settlement-funding.docx

1033-00006 · Redstone Gaming Corp · Insurance & Financial

letter-ironclad-settlement-funding.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-7800 Facsimile: (213) 555-7801 www.calderwoodharkness.com

December 12, 2024

VIA ELECTRONIC MAIL AND Sundial Data Systems

Mr. Daniel Royce Claims Adjuster Ironclad Surety & Insurance Co. 200 Park Avenue South, 14th Floor New York, NY 10003

Re: Settlement Funding Confirmation — *Redstone Gaming Corp. v. Grizzly Peak Research LLC et al.*, Superior Court of California, County of Los Angeles, Case No. 24STCV-01892; Ironclad Policy No. ML-2023-07714 (D&O / Media-Liability Coverage — Grizzly Peak Research LLC)

Dear Mr. Royce:

I. Introduction and Purpose of Letter

This firm represents Redstone Gaming Corp. ("RGC"), a Nevada corporation publicly traded on the Nasdaq Stock Market under the ticker symbol RDGM, with its principal executive offices located at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. We write to you in your capacity as the assigned Claims Adjuster for Ironclad Surety & Insurance Co. ("Ironclad") with respect to the above-captioned litigation and the related claims file maintained by Ironclad under Policy No. ML-2023-07714.

The purpose of this letter is to formally confirm the settlement terms reached in 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, and, in particular, to confirm Ironclad's funding obligation and commitment with respect to its insured's share of the negotiated settlement payment. As you are aware, Grizzly Peak Research LLC ("GPR") is insured under Ironclad's Directors and Officers / Media-Liability claims-made policy, Policy No. ML-2023-07714 (the "Policy"), and the settlement calls for a substantial funding contribution from Ironclad on behalf of its insured.

We have corresponded with you on multiple occasions over the course of this litigation, and we appreciate the engagement of your claims team in evaluating coverage and participating in the settlement discussions that led to the resolution described below. This letter is intended to memorialize the key settlement terms, outline the funding and escrow mechanics, and request certain written confirmations from Ironclad so that the parties may proceed expeditiously to finalize the definitive Settlement Agreement and related transactional documents.

II. Background of the Litigation

On February 5, 2024, RGC initiated this action by filing a Complaint against Grizzly Peak Research LLC in the Superior Court of California, County of Los Angeles, Case No. 24STCV-01892. On March 18, 2024, RGC filed a First Amended Complaint (the "FAC"), adding Grizzly Peak Capital Partners LP ("GPCP") and Tobias Fenchurch, individually, as defendants. A copy of the FAC is enclosed for Ironclad's records, to the extent it has not previously been provided to your claims file.

The FAC asserts the following causes of action against defendants:

1. Trade Libel (Cal. Civ. Code § 46(3));

2. Intentional Interference with Prospective Economic Advantage;

3. Unfair Business Practices (Cal. Bus. & Prof. Code § 17200 et seq.); and

4. Negligent Misrepresentation.

The claims arise from a coordinated short-selling attack carried out by defendants through the publication of three purportedly "investigative" research reports disseminated in rapid succession during February 2024. Specifically, GPR published the following reports on its website (grizzlypeakresearch.com) and simultaneously promoted them through its social media channels:

• February 7, 2024: "House of Cards: Redstone Gaming's Manufactured Earnings"

• February 14, 2024: "Rigged Reels: How Redstone's Slot Software Cheats the Regulators"

• February 21, 2024: "Double Down on Fraud: Redstone's Related-Party Shell Game"

These reports contained material falsehoods and misleading statements of a highly damaging nature. Among other things, the reports alleged that RGC had fabricated approximately $410 million in fiscal year 2023 revenue, that RGC had manipulated its random number generator ("RNG") software to deceive gaming regulators, and that RGC had engaged in undisclosed related-party transactions with a purported shell entity identified as "Vermilion Holdings LLC." Each of these allegations has been conclusively refuted:

• RGC's independent auditor, Pinnacle Audit & Advisory LLP, confirmed the accuracy of RGC's reported revenue figures for FY 2023 and issued an unqualified audit opinion that remains in full force and effect.

• The Nevada Gaming Control Board conducted a comprehensive review of RGC's RNG systems and, on March 29, 2024, formally cleared RGC of any irregularities or non-compliance.

• The United States Securities and Exchange Commission opened an informal inquiry following the publication of the reports but closed that inquiry on August 16, 2024, with no enforcement action, no comment letter, and no adverse finding of any kind.

The evidence developed in discovery confirmed that GPR and its affiliates maintained a short position of approximately 680,000 shares of RDGM common stock at the time of publication. The short position was established in the weeks immediately preceding the first report and was covered during and after the period of share-price decline triggered by the reports. Defendants are estimated to have generated short-sale profits of approximately $13.15 million from this trading activity.

The impact on RGC's stock price was severe and immediate. RDGM closed at $92.14 per share on February 6, 2024, the last trading day prior to the publication of the first report. By February 21, 2024, the date of the third report's publication, RDGM had declined to a trough of $72.80 per share—a cumulative decline of 21.0%. Based on RGC's shares outstanding, this decline represented an aggregate market-capitalization loss of approximately $1.427 billion.

RGC's damages expert, Dr. Elena Vostrikova of Meridian Forensic Economics LLC, conducted an event-study analysis in accordance with accepted financial-economics methodology and calculated adjusted damages attributable to the false statements in the reports of $327.6 million. In addition, RGC incurred direct out-of-pocket costs totaling $4.627 million in connection with the response to the reports, including fees paid to crisis-communications consultants, forensic accountants, and regulatory counsel.

Throughout the litigation, defendants mounted aggressive procedural challenges. On June 7, 2024, the Honorable Patricia Yamamoto denied defendants' special motion to strike under the anti-SLAPP statute (Cal. Code Civ. Proc. § 425.16), finding that RGC had demonstrated a probability of prevailing on each of its claims. Subsequently, on November 15, 2024, Judge Yamamoto denied defendants' motion for summary judgment on all four causes of action. Trial was scheduled to commence on March 10, 2025.

III. Settlement Terms

Against this procedural backdrop, the parties agreed to participate in a mediation to explore the possibility of a negotiated resolution. On December 3–4, 2024, the parties and their respective counsel attended a two-day mediation session before the Honorable Gerald K. Matsuda (Ret.) at the Westside Mediation Center, located at 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. Defendants were represented at the mediation by Raymond Caldwell and Natalie Orenstein of Caldwell, Tseng & Barrow LLP, 555 California Street, Suite 3100, San Francisco, California 94104.

After extensive arm's-length negotiations facilitated by Judge Matsuda, the parties reached a settlement-in-principle on December 4, 2024. The terms of the settlement were memorialized in a binding Mediator's Term Sheet signed by authorized representatives of all parties on that same date. The principal terms of the settlement are as follows:

A. Monetary Terms

The total settlement payment is $14.75 million, payable by defendants to RGC. The funding allocation for the settlement payment is as follows:

• $10,250,000.00 to be funded by Ironclad Surety & Insurance Co. under Policy No. ML-2023-07714, representing Ironclad's coverage obligation with respect to the claims asserted against its insured, GPR; and

• $4,500,000.00 to be funded jointly and severally by Grizzly Peak Research LLC (EIN: 85-3291064) and Grizzly Peak Capital Partners LP (EIN: 85-3291078).

B. Payment and Escrow Mechanics

All settlement funds are to be deposited into a designated escrow account within thirty (30) calendar days of the execution of the definitive Settlement Agreement (the "Effective Date"). The parties are targeting January 6, 2025, as the Effective Date. Accordingly, the resulting deadline for deposit of all settlement funds into escrow would be February 5, 2025. The escrow agent for the settlement is Great Basin Trust Company, N.A., as discussed in further detail in Section V below.

C. Non-Monetary Terms

In addition to the monetary payment, the settlement includes the following non-monetary provisions:

1. Corrective Publication. GPR shall publish a corrective statement of not fewer than 1,500 words on its website, grizzlypeakresearch.com, within five (5) business days of the Effective Date. The corrective statement shall remain posted and publicly accessible for a period of not less than twenty-four (24) months from the date of initial publication.

2. Social Media Corrective. GPR shall publish a summary corrective statement of not fewer than 280 characters on its X (formerly Fenmore Solutions) account, @GrizzlyPeakRes, within the same five-business-day period.

3. Stipulated Permanent Injunction. The parties shall stipulate to the entry of a permanent injunction barring defendants from (a) republishing any of the statements contained in the three reports identified above, and (b) trading, directly or indirectly, in RDGM securities for a period of five (5) years from the Effective Date.

4. Mutual Releases. The Settlement Agreement will contain mutual general releases among all parties, releasing all claims, known and unknown, arising out of or related to the subject matter of the litigation, including a waiver of rights under California Civil Code § 1542.

5. Non-Disparagement. The parties shall be bound by mutual non-disparagement obligations for a period of three (3) years from the Effective Date.

6. Confidentiality. The settlement amount ($14.75 million) and the funding allocation shall be treated as confidential by all parties. The existence of the settlement and the content of the corrective statements shall not be subject to confidentiality restrictions.

7. Stipulated Dismissal. The parties shall file a stipulated request for dismissal with prejudice within ten (10) business days of the Effective Date, with the court retaining jurisdiction to enforce the terms of the Settlement Agreement pursuant to California Code of Civil Procedure § 664.6.

8. Fees and Costs. Each party shall bear its own attorneys' fees and costs.

IV. Confirmation Requests to Ironclad

In light of the foregoing settlement terms and the critical role of Ironclad's funding commitment in effectuating the resolution of this matter, we respectfully request that Ironclad provide the following written confirmations:

1. Coverage Acknowledgment. Confirmation that Policy No. ML-2023-07714 provides coverage for the claims asserted against GPR in Case No. 24STCV-01892, and that Ironclad acknowledges its obligation under the terms of the Policy to fund the $10,250,000.00 settlement contribution allocated to Ironclad as set forth in the Mediator's Term Sheet.

2. Funding Commitment and Timeline. Confirmation that Ironclad commits to funding the full $10,250,000.00 within the thirty (30) calendar-day escrow deposit period established by the settlement terms—that is, no later than February 5, 2025, assuming the Settlement Agreement is executed on the target Effective Date of January 6, 2025. In the event the Effective Date is adjusted, the escrow deposit deadline would be adjusted correspondingly, and Ironclad's commitment to fund within the thirty-day period would remain in effect.

3. Wire Transfer to Escrow. Confirmation that Ironclad will wire transfer the $10,250,000.00 directly to the designated escrow account at Great Basin Trust Company, N.A., in accordance with wire instructions to be provided separately under cover of a dedicated wire-instruction letter.

We respectfully request that Ironclad provide its written confirmation of each of the foregoing items no later than December 23, 2024. This timeline is necessary to allow sufficient time for the finalization, circulation, and execution of the definitive Settlement Agreement and the companion Escrow Agreement in advance of the target Effective Date of January 6, 2025. Any delay in receiving Ironclad's confirmation could jeopardize the settlement timeline and potentially compromise the resolution that has been achieved.

V. Escrow Agent and Disbursement Coordination

As noted above, all settlement funds will be held by Great Basin Trust Company, N.A., which has been selected by the parties to serve as the neutral escrow agent for this transaction. Great Basin Trust Company, N.A., is a nationally chartered trust company with offices at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.

An Escrow Agreement among RGC, GPR, GPCP, and Great Basin Trust Company, N.A., is currently being prepared concurrently with the definitive Settlement Agreement. The Escrow Agreement will set forth the terms and conditions governing the deposit, holding, and disbursement of the settlement funds, including the conditions precedent to release of the funds to RGC.

To facilitate the wire-transfer logistics and ensure seamless coordination of the escrow-disbursement mechanics, we request that Ironclad designate a contact person within its organization who will be responsible for coordinating the wire transfer on Ironclad's end. If Mr. Royce will serve in that capacity, we would appreciate confirmation of the same. If a different individual within Ironclad's treasury, finance, or claims-payment department will be handling the wire transfer, we request that Ironclad provide that individual's name, title, telephone number, and email address at the earliest opportunity.

Wire transfer instructions for the escrow account at Great Basin Trust Company, N.A., will be transmitted to Ironclad separately under cover of a dedicated wire-instruction letter once the escrow account has been formally established and the account number and routing information have been confirmed by the escrow agent. We anticipate that the wire-instruction letter will be transmitted in early January 2025.

In addition, we request that Ironclad provide the following information to assist us in coordinating the funding timeline:

• Ironclad's preferred wire-transfer origination details, including the name and address of Ironclad's originating bank, the ABA routing number, and any reference or claim-file number that should be included in the wire transfer for Ironclad's internal tracking purposes.

• A description of any internal-approval processes, authorization requirements, or procedural steps within Ironclad that may affect the funding schedule, including the estimated time required for such internal processes to be completed once Ironclad has received the wire-transfer instructions and the final executed Settlement Agreement.

We ask that this information be provided together with the coverage and funding confirmations requested in Section IV above, no later than December 23, 2024, so that any potential logistical issues can be identified and resolved well in advance of the February 5, 2025 funding deadline.

VI. Enclosed Materials

For your reference and for Ironclad's claims-processing purposes, we have enclosed the following materials with this letter:

1. Summary of Mediator's Term Sheet (December 4, 2024). This document summarizes all material settlement terms as reflected in the binding Mediator's Term Sheet executed by the parties on December 4, 2024. Please note that the full Mediator's Term Sheet itself is confidential and subject to mediation privilege under California Evidence Code §§ 1115–1128. The enclosed summary has been prepared specifically for claims-processing purposes and contains the information necessary for Ironclad to evaluate and authorize its funding commitment.

2. First Amended Complaint, Case No. 24STCV-01892 (filed March 18, 2024). A courtesy copy of the operative pleading is enclosed for Ironclad's records, to the extent it has not previously been provided to the claims file.

Should Ironclad require any additional documents or information in connection with its review and processing of the settlement funding, please do not hesitate to contact the undersigned.

VII. Confidentiality

We wish to remind Ironclad that, pursuant to the settlement terms, the settlement amount of $14.75 million and the specific funding allocation between Ironclad and the individual defendants are to be treated as confidential by all parties to the settlement. The existence of the settlement itself and the content of the corrective statements to be published by GPR are not subject to confidentiality restrictions. We respectfully request that Ironclad and its personnel treat the settlement amount, the funding allocation, and any related financial details as confidential in all internal and external communications, consistent with these terms and with any applicable provisions of the definitive Settlement Agreement once executed.

VIII. Contact Information and Closing

We request that all correspondence, confirmations, and responses relating to the matters addressed in this letter be directed to the undersigned:

Francesca Morano Partner Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-7812 Facsimile: (213) 555-7801

Email: fmorano@calderwoodharkness.com

Please be advised that copies of this letter are being sent contemporaneously to Derek Olafson, General Counsel of Redstone Gaming Corp., and to Raymond Caldwell at Caldwell, Tseng & Barrow LLP, in his capacity as defense counsel coordinating with Ironclad on behalf of its insured.

We appreciate Ironclad's prompt attention to this matter and its cooperation throughout the claims process. The settlement represents a meaningful resolution of a complex and high-stakes dispute, and the timely funding of Ironclad's contribution is essential to ensuring that the resolution is effectuated in accordance with the terms to which all parties have agreed. We look forward to receiving Ironclad's written confirmations no later than December 23, 2024, and to working with your team to bring this matter to a successful conclusion.

Thank you for your continued cooperation.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano Partner

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

Raymond Caldwell, Caldwell, Tseng & Barrow LLP, 555 California Street, Suite 3100, San Francisco, CA 94104

Enclosures:

1. Summary of Mediator's Term Sheet (December 4, 2024)

2. First Amended Complaint, Case No. 24STCV-01892 (filed March 18, 2024)

CALDERWOOD & HARKNESS LLP Attorneys at Law 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-7800 Facsimile: (213) 555-7801 www.calderwoodharkness.com
December 12, 2024
VIA ELECTRONIC MAIL AND Sundial Data Systems
Mr. Daniel Royce Claims Adjuster Ironclad Surety & Insurance Co. 200 Park Avenue South, 14th Floor New York, NY 10003
Re: Settlement Funding Confirmation — *Redstone Gaming Corp. v. Grizzly Peak Research LLC et al.*, Superior Court of California, County of Los Angeles, Case No. 24STCV-01892; Ironclad Policy No. ML-2023-07714 (D&O / Media-Liability Coverage — Grizzly Peak Research LLC)
Dear Mr. Royce:
I. Introduction and Purpose of Letter
This firm represents Redstone Gaming Corp. ("RGC"), a Nevada corporation publicly traded on the Nasdaq Stock Market under the ticker symbol RDGM, with its principal executive offices located at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. We write to you in your capacity as the assigned Claims Adjuster for Ironclad Surety & Insurance Co. ("Ironclad") with respect to the above-captioned litigation and the related claims file maintained by Ironclad under Policy No. ML-2023-07714.
The purpose of this letter is to formally confirm the settlement terms reached in 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, and, in particular, to confirm Ironclad's funding obligation and commitment with respect to its insured's share of the negotiated settlement payment. As you are aware, Grizzly Peak Research LLC ("GPR") is insured under Ironclad's Directors and Officers / Media-Liability claims-made policy, Policy No. ML-2023-07714 (the "Policy"), and the settlement calls for a substantial funding contribution from Ironclad on behalf of its insured.
We have corresponded with you on multiple occasions over the course of this litigation, and we appreciate the engagement of your claims team in evaluating coverage and participating in the settlement discussions that led to the resolution described below. This letter is intended to memorialize the key settlement terms, outline the funding and escrow mechanics, and request certain written confirmations from Ironclad so that the parties may proceed expeditiously to finalize the definitive Settlement Agreement and related transactional documents.
II. Background of the Litigation
On February 5, 2024, RGC initiated this action by filing a Complaint against Grizzly Peak Research LLC in the Superior Court of California, County of Los Angeles, Case No. 24STCV-01892. On March 18, 2024, RGC filed a First Amended Complaint (the "FAC"), adding Grizzly Peak Capital Partners LP ("GPCP") and Tobias Fenchurch, individually, as defendants. A copy of the FAC is enclosed for Ironclad's records, to the extent it has not previously been provided to your claims file.
The FAC asserts the following causes of action against defendants:
1. Trade Libel (Cal. Civ. Code § 46(3));
2. Intentional Interference with Prospective Economic Advantage;
3. Unfair Business Practices (Cal. Bus. & Prof. Code § 17200 et seq.); and
4. Negligent Misrepresentation.
The claims arise from a coordinated short-selling attack carried out by defendants through the publication of three purportedly "investigative" research reports disseminated in rapid succession during February 2024. Specifically, GPR published the following reports on its website (grizzlypeakresearch.com) and simultaneously promoted them through its social media channels:
• February 7, 2024: "House of Cards: Redstone Gaming's Manufactured Earnings"
• February 14, 2024: "Rigged Reels: How Redstone's Slot Software Cheats the Regulators"
• February 21, 2024: "Double Down on Fraud: Redstone's Related-Party Shell Game"
These reports contained material falsehoods and misleading statements of a highly damaging nature. Among other things, the reports alleged that RGC had fabricated approximately $410 million in fiscal year 2023 revenue, that RGC had manipulated its random number generator ("RNG") software to deceive gaming regulators, and that RGC had engaged in undisclosed related-party transactions with a purported shell entity identified as "Vermilion Holdings LLC." Each of these allegations has been conclusively refuted:
• RGC's independent auditor, Pinnacle Audit & Advisory LLP, confirmed the accuracy of RGC's reported revenue figures for FY 2023 and issued an unqualified audit opinion that remains in full force and effect.
• The Nevada Gaming Control Board conducted a comprehensive review of RGC's RNG systems and, on March 29, 2024, formally cleared RGC of any irregularities or non-compliance.
• The United States Securities and Exchange Commission opened an informal inquiry following the publication of the reports but closed that inquiry on August 16, 2024, with no enforcement action, no comment letter, and no adverse finding of any kind.
The evidence developed in discovery confirmed that GPR and its affiliates maintained a short position of approximately 680,000 shares of RDGM common stock at the time of publication. The short position was established in the weeks immediately preceding the first report and was covered during and after the period of share-price decline triggered by the reports. Defendants are estimated to have generated short-sale profits of approximately $13.15 million from this trading activity.
The impact on RGC's stock price was severe and immediate. RDGM closed at $92.14 per share on February 6, 2024, the last trading day prior to the publication of the first report. By February 21, 2024, the date of the third report's publication, RDGM had declined to a trough of $72.80 per share—a cumulative decline of 21.0%. Based on RGC's shares outstanding, this decline represented an aggregate market-capitalization loss of approximately $1.427 billion.
RGC's damages expert, Dr. Elena Vostrikova of Meridian Forensic Economics LLC, conducted an event-study analysis in accordance with accepted financial-economics methodology and calculated adjusted damages attributable to the false statements in the reports of $327.6 million. In addition, RGC incurred direct out-of-pocket costs totaling $4.627 million in connection with the response to the reports, including fees paid to crisis-communications consultants, forensic accountants, and regulatory counsel.
Throughout the litigation, defendants mounted aggressive procedural challenges. On June 7, 2024, the Honorable Patricia Yamamoto denied defendants' special motion to strike under the anti-SLAPP statute (Cal. Code Civ. Proc. § 425.16), finding that RGC had demonstrated a probability of prevailing on each of its claims. Subsequently, on November 15, 2024, Judge Yamamoto denied defendants' motion for summary judgment on all four causes of action. Trial was scheduled to commence on March 10, 2025.
III. Settlement Terms
Against this procedural backdrop, the parties agreed to participate in a mediation to explore the possibility of a negotiated resolution. On December 3–4, 2024, the parties and their respective counsel attended a two-day mediation session before the Honorable Gerald K. Matsuda (Ret.) at the Westside Mediation Center, located at 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. Defendants were represented at the mediation by Raymond Caldwell and Natalie Orenstein of Caldwell, Tseng & Barrow LLP, 555 California Street, Suite 3100, San Francisco, California 94104.
After extensive arm's-length negotiations facilitated by Judge Matsuda, the parties reached a settlement-in-principle on December 4, 2024. The terms of the settlement were memorialized in a binding Mediator's Term Sheet signed by authorized representatives of all parties on that same date. The principal terms of the settlement are as follows:
A. Monetary Terms
The total settlement payment is $14.75 million, payable by defendants to RGC. The funding allocation for the settlement payment is as follows:
• $10,250,000.00 to be funded by Ironclad Surety & Insurance Co. under Policy No. ML-2023-07714, representing Ironclad's coverage obligation with respect to the claims asserted against its insured, GPR; and
• $4,500,000.00 to be funded jointly and severally by Grizzly Peak Research LLC (EIN: 85-3291064) and Grizzly Peak Capital Partners LP (EIN: 85-3291078).
B. Payment and Escrow Mechanics
All settlement funds are to be deposited into a designated escrow account within thirty (30) calendar days of the execution of the definitive Settlement Agreement (the "Effective Date"). The parties are targeting January 6, 2025, as the Effective Date. Accordingly, the resulting deadline for deposit of all settlement funds into escrow would be February 5, 2025. The escrow agent for the settlement is Great Basin Trust Company, N.A., as discussed in further detail in Section V below.
C. Non-Monetary Terms
In addition to the monetary payment, the settlement includes the following non-monetary provisions:
1. Corrective Publication. GPR shall publish a corrective statement of not fewer than 1,500 words on its website, grizzlypeakresearch.com, within five (5) business days of the Effective Date. The corrective statement shall remain posted and publicly accessible for a period of not less than twenty-four (24) months from the date of initial publication.
2. Social Media Corrective. GPR shall publish a summary corrective statement of not fewer than 280 characters on its X (formerly Fenmore Solutions) account, @GrizzlyPeakRes, within the same five-business-day period.
3. Stipulated Permanent Injunction. The parties shall stipulate to the entry of a permanent injunction barring defendants from (a) republishing any of the statements contained in the three reports identified above, and (b) trading, directly or indirectly, in RDGM securities for a period of five (5) years from the Effective Date.
4. Mutual Releases. The Settlement Agreement will contain mutual general releases among all parties, releasing all claims, known and unknown, arising out of or related to the subject matter of the litigation, including a waiver of rights under California Civil Code § 1542.
5. Non-Disparagement. The parties shall be bound by mutual non-disparagement obligations for a period of three (3) years from the Effective Date.
6. Confidentiality. The settlement amount ($14.75 million) and the funding allocation shall be treated as confidential by all parties. The existence of the settlement and the content of the corrective statements shall not be subject to confidentiality restrictions.
7. Stipulated Dismissal. The parties shall file a stipulated request for dismissal with prejudice within ten (10) business days of the Effective Date, with the court retaining jurisdiction to enforce the terms of the Settlement Agreement pursuant to California Code of Civil Procedure § 664.6.
8. Fees and Costs. Each party shall bear its own attorneys' fees and costs.
IV. Confirmation Requests to Ironclad
In light of the foregoing settlement terms and the critical role of Ironclad's funding commitment in effectuating the resolution of this matter, we respectfully request that Ironclad provide the following written confirmations:
1. Coverage Acknowledgment. Confirmation that Policy No. ML-2023-07714 provides coverage for the claims asserted against GPR in Case No. 24STCV-01892, and that Ironclad acknowledges its obligation under the terms of the Policy to fund the $10,250,000.00 settlement contribution allocated to Ironclad as set forth in the Mediator's Term Sheet.
2. Funding Commitment and Timeline. Confirmation that Ironclad commits to funding the full $10,250,000.00 within the thirty (30) calendar-day escrow deposit period established by the settlement terms—that is, no later than February 5, 2025, assuming the Settlement Agreement is executed on the target Effective Date of January 6, 2025. In the event the Effective Date is adjusted, the escrow deposit deadline would be adjusted correspondingly, and Ironclad's commitment to fund within the thirty-day period would remain in effect.
3. Wire Transfer to Escrow. Confirmation that Ironclad will wire transfer the $10,250,000.00 directly to the designated escrow account at Great Basin Trust Company, N.A., in accordance with wire instructions to be provided separately under cover of a dedicated wire-instruction letter.
We respectfully request that Ironclad provide its written confirmation of each of the foregoing items no later than December 23, 2024. This timeline is necessary to allow sufficient time for the finalization, circulation, and execution of the definitive Settlement Agreement and the companion Escrow Agreement in advance of the target Effective Date of January 6, 2025. Any delay in receiving Ironclad's confirmation could jeopardize the settlement timeline and potentially compromise the resolution that has been achieved.
V. Escrow Agent and Disbursement Coordination
As noted above, all settlement funds will be held by Great Basin Trust Company, N.A., which has been selected by the parties to serve as the neutral escrow agent for this transaction. Great Basin Trust Company, N.A., is a nationally chartered trust company with offices at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.
An Escrow Agreement among RGC, GPR, GPCP, and Great Basin Trust Company, N.A., is currently being prepared concurrently with the definitive Settlement Agreement. The Escrow Agreement will set forth the terms and conditions governing the deposit, holding, and disbursement of the settlement funds, including the conditions precedent to release of the funds to RGC.
To facilitate the wire-transfer logistics and ensure seamless coordination of the escrow-disbursement mechanics, we request that Ironclad designate a contact person within its organization who will be responsible for coordinating the wire transfer on Ironclad's end. If Mr. Royce will serve in that capacity, we would appreciate confirmation of the same. If a different individual within Ironclad's treasury, finance, or claims-payment department will be handling the wire transfer, we request that Ironclad provide that individual's name, title, telephone number, and email address at the earliest opportunity.
Wire transfer instructions for the escrow account at Great Basin Trust Company, N.A., will be transmitted to Ironclad separately under cover of a dedicated wire-instruction letter once the escrow account has been formally established and the account number and routing information have been confirmed by the escrow agent. We anticipate that the wire-instruction letter will be transmitted in early January 2025.
In addition, we request that Ironclad provide the following information to assist us in coordinating the funding timeline:
• Ironclad's preferred wire-transfer origination details, including the name and address of Ironclad's originating bank, the ABA routing number, and any reference or claim-file number that should be included in the wire transfer for Ironclad's internal tracking purposes.
• A description of any internal-approval processes, authorization requirements, or procedural steps within Ironclad that may affect the funding schedule, including the estimated time required for such internal processes to be completed once Ironclad has received the wire-transfer instructions and the final executed Settlement Agreement.
We ask that this information be provided together with the coverage and funding confirmations requested in Section IV above, no later than December 23, 2024, so that any potential logistical issues can be identified and resolved well in advance of the February 5, 2025 funding deadline.
VI. Enclosed Materials
For your reference and for Ironclad's claims-processing purposes, we have enclosed the following materials with this letter:
1. Summary of Mediator's Term Sheet (December 4, 2024). This document summarizes all material settlement terms as reflected in the binding Mediator's Term Sheet executed by the parties on December 4, 2024. Please note that the full Mediator's Term Sheet itself is confidential and subject to mediation privilege under California Evidence Code §§ 1115–1128. The enclosed summary has been prepared specifically for claims-processing purposes and contains the information necessary for Ironclad to evaluate and authorize its funding commitment.
2. First Amended Complaint, Case No. 24STCV-01892 (filed March 18, 2024). A courtesy copy of the operative pleading is enclosed for Ironclad's records, to the extent it has not previously been provided to the claims file.
Should Ironclad require any additional documents or information in connection with its review and processing of the settlement funding, please do not hesitate to contact the undersigned.
VII. Confidentiality
We wish to remind Ironclad that, pursuant to the settlement terms, the settlement amount of $14.75 million and the specific funding allocation between Ironclad and the individual defendants are to be treated as confidential by all parties to the settlement. The existence of the settlement itself and the content of the corrective statements to be published by GPR are not subject to confidentiality restrictions. We respectfully request that Ironclad and its personnel treat the settlement amount, the funding allocation, and any related financial details as confidential in all internal and external communications, consistent with these terms and with any applicable provisions of the definitive Settlement Agreement once executed.
VIII. Contact Information and Closing
We request that all correspondence, confirmations, and responses relating to the matters addressed in this letter be directed to the undersigned:
Francesca Morano Partner Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-7812 Facsimile: (213) 555-7801
Email: fmorano@calderwoodharkness.com
Please be advised that copies of this letter are being sent contemporaneously to Derek Olafson, General Counsel of Redstone Gaming Corp., and to Raymond Caldwell at Caldwell, Tseng & Barrow LLP, in his capacity as defense counsel coordinating with Ironclad on behalf of its insured.
We appreciate Ironclad's prompt attention to this matter and its cooperation throughout the claims process. The settlement represents a meaningful resolution of a complex and high-stakes dispute, and the timely funding of Ironclad's contribution is essential to ensuring that the resolution is effectuated in accordance with the terms to which all parties have agreed. We look forward to receiving Ironclad's written confirmations no later than December 23, 2024, and to working with your team to bring this matter to a successful conclusion.
Thank you for your continued cooperation.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano Partner
cc: Derek Olafson, General Counsel, Redstone Gaming Corp., 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, NV 89113
Raymond Caldwell, Caldwell, Tseng & Barrow LLP, 555 California Street, Suite 3100, San Francisco, CA 94104
Enclosures:
1. Summary of Mediator's Term Sheet (December 4, 2024)
2. First Amended Complaint, Case No. 24STCV-01892 (filed March 18, 2024)

CALDERWOOD & HARKNESS LLP

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