1033-00006 · Redstone Gaming Corp · Mediation & Settlement

post-mediation-report.docx DOCUMENT Litigation

14 / 36 ← → ✕

MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

TO: Derek Olafson, General Counsel, Redstone Gaming Corp.

FROM: Francesca Morano, Calderwood & Harkness LLP

DATE: December 5, 2024

RE: Post-Mediation Report — Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Superior Court of California, County of Los Angeles, Case No. 24STCV-01892

CC: Marcus J. Calloway, CEO, Redstone Gaming Corp.; Samuel Eklund, Calderwood & Harkness LLP; Carlos Espinoza, Calderwood & Harkness LLP

I. Executive Summary

The purpose of this memorandum is to report on the outcome of the two-day mediation conducted on December 3–4, 2024, and to provide a comprehensive summary of the binding Mediator's Term Sheet signed by all parties and their respective counsel on December 4, 2024. This memorandum also sets forth our assessment of the settlement terms, identifies next steps required to finalize the settlement, and proposes a detailed timeline for the "papering" phase.

Bottom-line result: A settlement-in-principle has been reached on terms that we consider highly favorable to Redstone Gaming Corp. ("RGC"). The principal terms include a total monetary payment of $14.75 million to RGC, corrective publications directly addressing all three defamatory research reports published by Grizzly Peak Research LLC ("GPR") in February 2024, and permanent injunctive relief prohibiting both republication of the defamatory statements and trading in RDGM securities by the defendants for a period of five years.

The Mediator's Term Sheet executed on December 4, 2024, is binding on all parties. The next phase of this matter involves drafting and negotiating the formal Settlement Agreement and Mutual Release, together with all ancillary documents, including the text of the corrective statements, the escrow agreement with Great Basin Trust Company, N.A., the stipulated dismissal with prejudice, and the stipulated permanent injunction to be entered by the court. Our target execution date for the Settlement Agreement is January 6, 2025, and we believe this timeline is achievable provided that all parties engage constructively in the papering process over the coming weeks.

This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for the use of the addressee and copy recipients and should not be distributed further without the prior approval of outside counsel.

II. Mediation Background

A. Mediation Logistics

The mediation was conducted over two full days on December 3 and December 4, 2024, at the Westside Mediation Center, located at 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. The mediation was facilitated by the Honorable Gerald K. Matsuda (Ret.), a highly respected former justice of the California Court of Appeal, Second Appellate District, who has extensive experience mediating complex commercial and defamation disputes.

The following individuals attended the mediation on behalf of Plaintiff Redstone Gaming Corp.:

• Francesca Morano, Partner, Calderwood & Harkness LLP — lead outside counsel

• Carlos Espinoza, Associate, Calderwood & Harkness LLP — litigation team member

• Derek Olafson, General Counsel, Redstone Gaming Corp. — corporate representative with settlement authority

• Janelle Hu, Vice President, Investor Relations, Redstone Gaming Corp. — attending in an advisory capacity regarding market impact and communications strategy

• Marcus J. Calloway, CEO, Redstone Gaming Corp. — available by telephone throughout both days and consulted at critical junctures in the negotiation

The following individuals attended the mediation on behalf of Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch:

• Raymond Caldwell, Partner, Caldwell, Tseng & Barrow LLP (555 California Street, Suite 3100, San Francisco, CA 94104) — lead defense counsel

• Natalie Orenstein, Associate, Caldwell, Tseng & Barrow LLP — defense litigation team member

• Tobias Fenchurch, Managing Director and sole member of Grizzly Peak Research LLC and General Partner of Grizzly Peak Capital Partners LP — corporate representative with settlement authority for both GPR entities

• Daniel Royce, Claims Adjuster, Ironclad Surety & Insurance Co. — participating by video conference throughout both days; representing the insurer's interests under Policy No. ML-2023-07714 (D&O / media-liability coverage) and possessing authority to commit insurance-funded settlement contributions

B. Pre-Mediation Posture

Calderwood & Harkness submitted a confidential mediation brief to the Honorable Gerald K. Matsuda on November 27, 2024. The mediation brief detailed RGC's claims for trade libel, defamation per se, intentional interference with prospective economic advantage, and unfair business practices under California Business & Professions Code § 17200 et seq. The brief emphasized the strength of RGC's case on liability, the magnitude of the proven damages, and the complete exoneration of RGC by both the Nevada Gaming Control Board and the United States Securities and Exchange Commission. A copy of the mediation brief was not served on opposing counsel, consistent with the Westside Mediation Center's protocols for confidential submissions.

RGC entered the mediation with board-authorized settlement authority, as memorialized in the Settlement Authority Memorandum dated November 25, 2024, approved by the RGC Board of Directors. The minimum acceptable monetary component under the board's authorization was $12 million, and RGC's negotiating team was further authorized to insist upon meaningful corrective publications and injunctive relief as essential non-monetary components of any resolution.

Our team identified the following key leverage points entering the mediation:

1. Denial of Defendants' Anti-SLAPP Motion. On June 7, 2024, Judge Patricia Yamamoto denied defendants' special motion to strike under California Code of Civil Procedure § 425.16 (the anti-SLAPP statute), finding that RGC had demonstrated a probability of prevailing on its claims. The court's ruling was significant because it rejected defendants' contention that the three research reports constituted protected speech on a matter of public concern. While the court acknowledged the reports touched on matters of public interest, it concluded that RGC had shown sufficient evidence of knowing falsity and actual malice to survive the anti-SLAPP threshold. Defendants did not seek interlocutory appellate review of this order.

2. Denial of Defendants' Motion for Summary Judgment. On November 15, 2024 — less than three weeks before the mediation — Judge Yamamoto denied defendants' motion for summary judgment in its entirety. The court found triable issues of material fact on every element of RGC's trade libel claim, including falsity, knowledge of falsity, and causation. This ruling was a critical development that significantly altered the negotiating dynamic in RGC's favor.

3. Expert Damages Evidence. RGC's retained damages expert, Dr. Elena Vostrikova, Ph.D. (Department of Economics, Columbia University), prepared an event-study analysis estimating total damages attributable to the three reports at $327.6 million. Dr. Vostrikova's methodology isolated the abnormal returns in RDGM stock on the three publication dates and the subsequent trading days, controlling for market-wide and industry-specific factors. Her report was served on November 1, 2024, and defendants did not move to exclude it.

4. RGC's Documented Out-of-Pocket Costs. RGC incurred aggregate out-of-pocket costs of $4.627 million in direct response to the defamatory reports, including $2.18 million in crisis communications and public relations expenses, $1.46 million in internal investigation and forensic audit costs incurred through Pinnacle Audit & Advisory LLC, and $987,000 in regulatory-response costs incurred through Hargrove & Sato LLP for engagement with the Nevada Gaming Control Board and the SEC.

5. GPR's Short-Sale Profits. Documentary evidence obtained in discovery established that Grizzly Peak Capital Partners LP maintained short positions of approximately 680,000 shares of RDGM stock prior to and during the publication of the three reports and realized estimated trading profits of approximately $13.15 million from the decline in RDGM's stock price following the publications. This evidence was central to our claim for disgorgement and to the broader narrative of defendants' financial motivation for publishing the false reports.

6. Regulatory Exoneration. The Nevada Gaming Control Board completed an independent audit of RGC's random number generator ("RNG") systems and cleared RGC on March 29, 2024, finding no evidence of the RNG manipulation alleged in the second GPR report. Similarly, the SEC's Division of Enforcement closed its informal inquiry into RGC's financial reporting on August 16, 2024, with no enforcement action, no comment letter, and no referral — a complete exoneration that undermined the factual predicates of GPR's first and third reports.

Against this backdrop, defendants' primary defense arguments entering the mediation were limited to the following: (i) First Amendment and anti-SLAPP protections (already rejected by the court), (ii) the opinion-privilege defense — i.e., that the reports constituted protected expressions of opinion rather than actionable statements of fact — and (iii) challenges to RGC's causation theory and damages quantum, particularly the argument that RDGM's stock-price decline was attributable to broader market conditions rather than the GPR reports. While these defenses carried some residual trial risk, defendants' bargaining position was materially weakened by the two adverse rulings from Judge Yamamoto and the overwhelming weight of RGC's evidentiary record.

C. Mediation Proceedings Summary

Day 1 — December 3, 2024. The mediation commenced at 9:00 a.m. with an opening joint session in which all parties, counsel, and the mediator were present. Mediator Matsuda provided introductory framework remarks, emphasizing the binding nature of any term sheet executed during the mediation and the confidentiality of the proceedings under California Evidence Code §§ 1115–1128. Following the joint session, the parties separated into private caucuses for the remainder of the day.

During the afternoon caucuses, initial demands and offers were exchanged through the mediator. RGC's opening demand was $45 million in monetary relief plus full corrective publications and permanent injunctive relief. Defendants' initial offer was $3.5 million in total monetary payment, limited to a brief "clarifying statement" to be posted on GPR's website for six months, with no injunctive relief. As expected, there was a significant gap on both monetary terms and the scope of corrective statements at the close of the first day. However, Mediator Matsuda expressed confidence that the gap was bridgeable and encouraged both sides to return the following morning with revised positions.

Day 1 concluded at approximately 7:30 p.m. The mediator met separately with each side before adjournment and communicated his assessment that both parties were negotiating in good faith, though substantial work remained.

Day 2 — December 4, 2024. Caucuses resumed at 9:00 a.m. The morning sessions on Day 2 yielded meaningful progress on the non-monetary terms, particularly the scope and content of the corrective publications and the parameters of the injunctive relief. By approximately 12:30 p.m., the parties had reached substantive agreement on the framework for the corrective statements and the contours of the permanent injunction, including a five-year trading bar that had initially been resisted by defendants.

Monetary negotiations continued through the afternoon with incremental movement on both sides. RGC reduced its demand in stages from $45 million to $22 million and eventually to $16.5 million. Defendants increased their offer in stages from $3.5 million to $8 million, then to $11 million, and ultimately to $13.5 million. At approximately 4:45 p.m., the mediator proposed a final package at $14.75 million, which he characterized as a fair midpoint given the relative strengths and risk profiles of both sides. After separate consultations — including a telephone call between Derek Olafson and Marcus Calloway, and a conference between Raymond Caldwell, Tobias Fenchurch, and Daniel Royce of Ironclad — both sides accepted the mediator's proposal.

The complete settlement package was agreed upon at approximately 6:15 p.m. on December 4, 2024. The Mediator's Term Sheet was thereafter drafted, reviewed, and executed by all parties and their counsel before departure from the mediation center. A copy of the executed Term Sheet is enclosed with this memorandum.

We note that Mediator Matsuda's role was instrumental in bridging the gap, particularly with respect to two issues that threatened to derail the process: (i) the specificity and scope of the corrective-statement language, where the mediator helped craft a framework requiring GPR to acknowledge "material inaccuracies" in all three reports without requiring an outright admission of fraud or malice; and (ii) the duration of the securities-trading injunction, where the mediator persuaded defendants to accept a five-year bar rather than the two-year term they had initially proposed.

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

The following is a detailed summary of the binding Mediator's Term Sheet executed by all parties and counsel on December 4, 2024. This term sheet governs the parties' obligations pending execution of the formal Settlement Agreement and Mutual Release.

A. Monetary Payment

The Term Sheet provides for a total settlement payment of $14,750,000.00 (Fourteen Million Seven Hundred Fifty Thousand Dollars), payable to Redstone Gaming Corp.

The settlement payment is to be funded from two sources:

• $10,250,000.00 from Ironclad Surety & Insurance Co. ("Ironclad") under the defendants' directors and officers / media-liability insurance policy, Policy No. ML-2023-07714. This contribution represents the insurer's assessment of the available coverage under the claims-made policy, net of applicable retention, and was confirmed during the mediation by Daniel Royce, Ironclad's claims adjuster, following telephone consultation with Ironclad's coverage counsel.

• $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP, jointly and severally. This amount represents the defendants' direct contribution to the settlement and is to be funded from GPR's and GPCP's own resources.

Payment Timeline: All settlement funds — both the Ironclad contribution and the GPR/GPCP contribution — are to be deposited within 30 calendar days of the execution of the Settlement Agreement (the "Effective Date") into an interest-bearing escrow account at Great Basin Trust Company, N.A., located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169. Assuming a January 6, 2025 Effective Date, the escrow deposit deadline would be February 5, 2025.

Assessment Note: The $14.75 million settlement represents approximately 4.5% of Dr. Vostrikova's event-study-adjusted damages estimate of $327.6 million and is obviously a fraction of the approximately $1.427 billion aggregate market-capitalization loss at trough (based on a decline from approximately $25.37 per share to approximately $19.34 per share across RDGM's approximately 73.8 million shares outstanding). However, the settlement amount meaningfully exceeds GPR's estimated short-sale profit of approximately $13.15 million, thereby ensuring a disgorgement-plus recovery. Further, the settlement reflects the practical constraints of the defendants' limited asset base — GPR's and GPCP's combined cash and receivables are estimated at approximately $22 million as of year-end 2024, based on financial documents produced in discovery — and the capacity of Ironclad's policy under its claims-made coverage structure. In our assessment, extracting a recovery that exceeds both the defendants' trading profits and RGC's documented out-of-pocket costs, while also securing comprehensive non-monetary relief, represents an excellent result.

B. Corrective Statements

The corrective-statement provisions of the Term Sheet are among the most important components of the settlement from RGC's strategic and reputational perspective.

1. Corrective Publication (Full Text). Grizzly Peak Research LLC is required to publish a corrective statement (the "Corrective Publication") on its official website, grizzlypeakresearch.com, which is the same platform on which the three original defamatory reports were published and which remains a primary destination for short-seller research within the financial-services community.

Timing: The Corrective Publication must be posted within 5 business days of the Effective Date of the Settlement Agreement. Assuming an Effective Date of January 6, 2025, the target posting date would be January 13, 2025.

Minimum Length: The Corrective Publication must be not fewer than 1,500 words in length, ensuring a substantive and detailed retraction rather than a cursory or perfunctory notice.

Required Content Acknowledgments: The Term Sheet specifies that the Corrective Publication must include, at a minimum, the following acknowledgments:

(a) That the three research reports published by GPR — specifically: (i) "House of Cards: Redstone Gaming's Manufactured Earnings," dated February 7, 2024; (ii) "Rigged Reels: How Redstone's Slot Software Cheats the Regulators," dated February 14, 2024; and (iii) "Double Down on Fraud: Redstone's Related-Party Shell Game," dated February 21, 2024 — contained material inaccuracies.

(b) That the revenue-fabrication allegation contained in the first report — in which GPR claimed that RGC had fabricated approximately $410 million in fiscal-year 2023 revenue — was unfounded.

(c) That the RNG-manipulation allegation contained in the second report — in which GPR alleged that RGC had manipulated its slot-machine random number generator software to deceive state gaming regulators — was disproven by the Nevada Gaming Control Board's independent audit, which was completed on March 29, 2024, and which cleared RGC of all allegations of software manipulation or regulatory non-compliance.

(d) That the related-party allegation contained in the third report — in which GPR alleged that RGC was engaged in fraudulent related-party transactions through an entity called Vermilion Holdings LLC — was based on incomplete information and was misleading.

Duration: The Corrective Publication must remain prominently posted on grizzlypeakresearch.com for a minimum period of 24 months from the date of initial posting, which would require the statement to remain accessible through at least January 2027.

Mutual Approval of Text: The exact text of the Corrective Publication is subject to the mutual approval of both parties during the settlement-papering phase. Calderwood & Harkness will prepare the initial draft, coordinating with RGC's crisis communications advisors at Crestline Equity Partners Group Inc., and will submit the proposed text to Caldwell, Tseng & Barrow for review and negotiation.

2. Social Media Corrective Statement. In addition to the full Corrective Publication on its website, GPR is required to post a summary corrective statement on its social media account, @GrizzlyPeakRes, which is maintained on the X (formerly Fenmore Solutions) platform and which had approximately 142,000 followers at the time of the original publications in February 2024. This social media account was a primary vector through which GPR disseminated its reports and amplified their market impact.

Minimum Length: The social media corrective statement must be not fewer than 280 characters in length.

Content: The social media post must include a direct link to the full Corrective Publication on grizzlypeakresearch.com and must contain a summary acknowledgment of material inaccuracies in the prior reports.

Timing: The social media corrective statement must be posted within 5 business days of the Effective Date, concurrent with the posting of the full Corrective Publication.

Mutual Approval of Text: As with the Corrective Publication, the exact text of the social media corrective statement is subject to the mutual approval of both parties.

C. Permanent Injunction (by Stipulation)

The Term Sheet provides for a stipulated permanent injunction to be submitted to Judge Patricia Yamamoto for entry as an order of the court. The injunctive relief has two principal components:

Republication Injunction: Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch are permanently enjoined from republishing the three reports identified above or any substantially similar statements concerning Redstone Gaming Corp., its officers, its directors, its financial performance, its regulatory compliance, or its gaming technology. This provision eliminates the risk that defendants could repackage or re-disseminate the false narratives in any form, whether on GPR's own platform, through third-party publications, or through social media.

Trading Bar: Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch are permanently enjoined from trading in RDGM securities — including common stock, options, futures, swaps, or any other derivative instruments linked to RDGM — for a period of 5 years from the Effective Date. Assuming an Effective Date of January 6, 2025, this trading bar would remain in effect through January 6, 2030. This provision prevents defendants from establishing new short positions or otherwise profiting from any residual or future negative market sentiment attributable to the original reports or any related activity.

The stipulated permanent injunction is to be submitted to Judge Patricia Yamamoto as a Stipulation and [Proposed] Order for Entry of Permanent Injunction, and Calderwood & Harkness will prepare the initial draft of this document for review by defense counsel.

D. Mutual Releases

The Term Sheet provides for broad mutual releases of all claims, demands, causes of action, liabilities, damages, costs, and expenses arising from or related to (i) the publication of the three reports, (ii) the trading activity of Grizzly Peak Capital Partners LP in RDGM securities, and (iii) the litigation itself (Case No. 24STCV-01892).

The releases are structured to run to and from all parties on both sides of the dispute:

• On the plaintiff's side: Redstone Gaming Corp., including its officers, directors, employees, subsidiaries, affiliates, successors, and assigns.

• On the defendants' side: Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, Grizzly Peak Capital GP LLC (the general partner entity of GPCP), and Tobias Fenchurch, individually, including their respective members, managers, officers, employees, affiliates, successors, and assigns.

Carve-outs: The releases expressly carve out the parties' obligations under the Settlement Agreement itself, ensuring that the settlement terms remain fully enforceable notwithstanding the mutual releases. In addition, claims arising from future conduct (i.e., conduct occurring after the Effective Date) are not released.

E. Non-Disparagement. The Term Sheet includes a mutual non-disparagement clause applicable to both parties. Under this provision, neither party — and neither party's officers, directors, members, employees, or agents — may make any public or private statement that disparages, defames, or casts in a negative light the other party or any of the other party's officers, directors, members, employees, or agents.

The non-disparagement obligation has a term of 3 years from the Effective Date, running through approximately January 6, 2027 (assuming a January 6, 2025 Effective Date). The three-year term was negotiated as a compromise between RGC's preference for a five-year term and defendants' preference for a one-year term.

F. Confidentiality. The Term Sheet draws a deliberate distinction between the monetary terms and the non-monetary terms of the settlement for purposes of confidentiality:

• Confidential: The settlement amount ($14,750,000.00) and the allocation of funding between Ironclad and the GPR entities are confidential. Neither party may disclose the monetary terms of the settlement absent a court order, legal compulsion (e.g., subpoena), or regulatory requirement (e.g., SEC filing obligations). Any required disclosure under securities regulations must be made in the most limited form permissible.

• Not Confidential: The existence of the settlement and the corrective statements are expressly not confidential. Both parties may acknowledge publicly that the litigation has been resolved through a settlement and that GPR has published corrective statements addressing its prior reports. This structure was critical to RGC's objectives, as the reputational value of the settlement depends on RGC's ability to publicize the corrective publications and the resolution of the case.

G. Stipulated Dismissal

The entire action — Case No. 24STCV-01892, including all claims and cross-claims — is to be dismissed with prejudice within 10 business days of the Effective Date. Assuming an Effective Date of January 6, 2025, the target dismissal filing date would be approximately February 19, 2025 (accounting for the Martin Luther King Jr. Day and Presidents' Day holidays).

The stipulated dismissal will include a provision requesting that the court 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 a motion by a party to a settlement if the case is not voluntarily resolved.

H. Attorneys' Fees

Each party shall bear its own attorneys' fees and costs incurred in connection with the litigation and the settlement. This provision is standard for settlements of this nature and avoids the cost and complexity of a contested fee proceeding.

IV. Assessment of Settlement Terms

A. Monetary Recovery

The $14.75 million monetary recovery must be evaluated in context. While the total is a fraction of Dr. Vostrikova's event-study-adjusted damages estimate of $327.6 million and an even smaller fraction of the approximately $1.427 billion aggregate market-capitalization loss at trough (calculated as the difference between RDGM's pre-publication market capitalization of approximately $6.37 billion and the trough market capitalization of approximately $4.95 billion, based on the stock-price decline from $25.37 to $19.34 per share across 73.8 million shares outstanding), the recovery represents a strong outcome when measured against the practical constraints and litigation risks that informed the negotiation.

Several factors support this assessment:

(a) Defendants' Limited Balance Sheet. GPR's and GPCP's combined cash and receivables are estimated at approximately $22 million as of year-end 2024. A judgment exceeding the defendants' ability to pay would have limited practical value. The $4.50 million direct contribution from GPR/GPCP represents approximately 20% of their liquid assets, which is a meaningful and enforceable extraction.

(b) Insurance Policy Limits. Ironclad's $10.25 million contribution reflects the practical capacity of the D&O / media-liability policy (Policy No. ML-2023-07714) after accounting for the applicable self-insured retention and Ironclad's assessment of coverage. Pursuing a bad-faith claim against Ironclad to access additional funds would have been speculative, costly, and would have substantially delayed resolution.

(c) Trial Risks and Uncertainties. Although RGC obtained favorable rulings on both the anti-SLAPP motion and the summary judgment motion, trial remained inherently uncertain. The actual-malice standard applicable to RGC's defamation claim required proof by clear and convincing evidence — a heightened burden that presented real challenges in front of a jury. Defendants' opinion-privilege defense, while we believe it was weak, could not be dismissed as frivolous, and a jury instruction on the distinction between statements of fact and opinion would have created additional uncertainty. Causation presented further complexity, as defendants would have argued that market-wide factors — rather than the GPR reports alone — contributed to RDGM's stock-price decline.

(d) Disgorgement-Plus Result. Critically, the $14.75 million recovery exceeds GPR's estimated short-sale profit of approximately $13.15 million, achieved through the approximately 680,000-share short position maintained by Grizzly Peak Capital Partners LP. The settlement thus achieves more than full disgorgement of the defendants' ill-gotten gains — a result that sends a meaningful deterrent signal.

(e) Recovery of Out-of-Pocket Costs. The recovery substantially exceeds RGC's documented out-of-pocket costs of $4.627 million, which were incurred in direct response to the defamatory reports and included:

• Crisis communications and public relations costs: $2,180,000

• Internal investigation and forensic audit costs (Pinnacle Audit & Advisory LLC): $1,460,000

• Regulatory-response costs (Hargrove & Sato LLP — NGCB and SEC engagement): $987,000

After accounting for these out-of-pocket costs, the net monetary recovery available to RGC is approximately $10.12 million — a sum that provides meaningful additional compensation beyond cost reimbursement.

B. Non-Monetary Relief

The non-monetary components of the settlement are, in many respects, as valuable as the monetary recovery — and potentially more so from a long-term strategic and reputational perspective.

Corrective Publication. The requirement that GPR publish a detailed, 1,500-word corrective statement on grizzlypeakresearch.com — the same platform on which the original false reports were published — is of significant strategic and reputational value. The Corrective Publication directly addresses the three false narratives (revenue fabrication, RNG manipulation, and related-party fraud) that damaged RGC's market credibility and required the company to divert substantial management time and financial resources to crisis response, regulatory engagement, and investor relations. The 24-month posting requirement ensures sustained visibility, and the social media corrective statement via the @GrizzlyPeakRes account (with its approximately 142,000 followers) extends the reach of the correction to the audience that was most directly exposed to the original false reports.

Permanent Injunction on Republication. The stipulated permanent injunction on republication of the three reports or any substantially similar statements eliminates the ongoing risk that GPR could repackage or re-disseminate the defamatory content, whether in updated reports, blog posts, media interviews, or social media postings. This relief is particularly important given GPR's demonstrated willingness to engage in a serial publication strategy — the three reports were released over a period of just 14 days, in a coordinated campaign designed to maximize market impact.

Five-Year Trading Bar. The five-year injunction on trading in RDGM securities by all three defendants prevents GPR and its affiliated entities from establishing new short positions that could be used to profit from any future negative campaign against RGC. The trading bar also serves as a powerful structural deterrent, as it removes any financial incentive for GPR to engage in conduct that could undermine the objectives of the corrective statements.

Market-Cap Recovery. RGC's stock price and market capitalization have partially recovered since the trough in late February/early March 2024. As of early January 2025 (projected), RDGM's market capitalization is estimated at approximately $6.1 billion, representing a recovery from the approximately $4.95 billion trough but still approximately $700 million below the pre-publication level of approximately $6.8 billion. We believe the corrective publications, combined with RGC's ability to publicize the settlement outcome, should contribute to further narrowing of this gap over time.

C. Risk Avoidance

Beyond the affirmative benefits of the settlement, the resolution avoids several material risks and costs:

• Trial Risk. As noted above, the heightened clear-and-convincing-evidence standard for actual malice, the opinion-privilege defense, and the complexities of stock-price-decline causation analysis all presented real — if manageable — risks at trial. A jury verdict for defendants, while unlikely in our assessment, was not inconceivable and would have left RGC with no recovery and significant sunk litigation costs.

• Trial Expense. The estimated cost to RGC of proceeding through trial was $3–5 million in additional attorneys' fees and costs, including expert witness fees for trial preparation and testimony, deposition-video editing, trial graphics, and jury consultants. Settlement avoids these costs entirely.

• Adverse Precedent. A trial loss could have generated adverse precedent in California regarding the scope of First Amendment protections for short-seller research reports. Such precedent could have had implications beyond this case, potentially emboldening other short-seller operations to target RGC or similarly situated companies with impunity.

• Continued Reputational Uncertainty. Absent a settlement, the ongoing pendency of the litigation would have continued to serve as an overhang on RGC's stock price and market perception, as analysts and investors would have been unable to assess the ultimate outcome of the dispute.

V. Next Steps — Settlement Papering Timeline

The binding Term Sheet provides the framework for the formal settlement documents that must now be drafted, negotiated, and executed. The following outlines the documents to be prepared, the key procedural steps, and the proposed timeline for completing the papering phase.

A. Documents to Be Drafted and Exchanged

Calderwood & Harkness will take the lead in preparing the initial drafts of all settlement documents, which will be circulated to Caldwell, Tseng & Barrow LLP ("CTB") for review and comment. The documents to be prepared are as follows:

1. Settlement Agreement and Mutual Release. This is the master agreement governing all aspects of the settlement, including the monetary payment terms, corrective statement obligations, injunctive relief provisions, mutual releases, non-disparagement clause, confidentiality provisions, and dismissal mechanics. Calderwood & Harkness will prepare the initial draft and circulate it to CTB. Target first draft: December 16, 2024.

2. Exhibit A: Corrective Publication (Full Text). Calderwood & Harkness will prepare the initial draft of the 1,500-word Corrective Publication, incorporating the required acknowledgments specified in the Term Sheet. The draft will be prepared in close coordination with Crestline Equity Partners Group Inc. (contact: Simone Arecchi) to ensure that the language is both legally sufficient and optimally crafted for maximum reputational impact.

3. Exhibit B: Social Media Corrective Statement. Calderwood & Harkness will prepare the initial draft of the summary corrective statement for posting on @GrizzlyPeakRes, again coordinating with Ashgrove Equity Partners on messaging strategy and format.

4. Exhibit C: Form of Stipulated Dismissal with Prejudice. Calderwood & Harkness will prepare the standard-form stipulated dismissal for Case No. 24STCV-01892, including the § 664.6 retention-of-jurisdiction provision.

5. Exhibit D: Form of Stipulated Permanent Injunction. Calderwood & Harkness will prepare the stipulated permanent injunction for submission to Judge Yamamoto, encompassing both the republication injunction and the five-year trading bar. This document will be styled as a Stipulation and [Proposed] Order for Entry of Permanent Injunction.

6. Escrow Agreement. A separate escrow agreement among Redstone Gaming Corp., Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Great Basin Trust Company, N.A., governing the deposit, holding, and disbursement of the $14.75 million settlement funds. Calderwood & Harkness will coordinate with Great Basin Trust Company regarding their standard form escrow agreement and will negotiate any necessary modifications.

7. Stipulation and [Proposed] Order for Dismissal with Prejudice. This is the court-filing version of the dismissal stipulation, for filing with the Los Angeles Superior Court.

8. Stipulation and [Proposed] Order for Entry of Permanent Injunction. This is the court-filing version of the permanent injunction, for filing with the Los Angeles Superior Court.

B. Court Notifications

A letter will be sent to Judge Patricia Yamamoto notifying the court that the parties have reached a settlement-in-principle and requesting that all pending dates — including the trial date and any remaining pretrial deadlines — be vacated. The letter will also request the scheduling of a hearing for entry of the stipulated dismissal and permanent injunction at the appropriate time. This letter must be sent no later than December 10, 2024, to comply with the court's standing order regarding notification of settlements.

C. Insurance Coordination

A letter will be sent to Daniel Royce, Claims Adjuster, Ironclad Surety & Insurance Co., confirming the settlement terms as agreed at mediation and requesting written confirmation of Ironclad's commitment to fund $10,250,000.00 under Policy No. ML-2023-07714. The letter will also request Ironclad's wire-transfer timeline and identify any documentation or releases that Ironclad may require as conditions precedent to funding. This letter must be sent no later than December 12, 2024, to ensure that the insurance-funding process proceeds on a timeline consistent with the 30-day escrow deposit deadline.

D. Escrow Setup

Calderwood & Harkness will engage Great Basin Trust Company, N.A. to open the escrow account and will coordinate wire-transfer instructions for both funding sources:

• $10,250,000.00 from Ironclad Surety & Insurance Co.

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

The escrow deposit deadline is 30 calendar days from execution of the Settlement Agreement. Assuming a January 6, 2025 Effective Date, the target escrow deposit deadline is February 5, 2025. Great Basin Trust Company's standard escrow fees and the allocation of such fees between the parties will be addressed in the Escrow Agreement.

E. Communications and PR

RGC's public communications strategy surrounding the settlement will require careful coordination:

• Crestline Equity Partners Group Inc. (contact: Simone Arecchi): Calderwood & Harkness will coordinate with Ashgrove Equity Partners regarding the preparation of RGC's public statement upon settlement execution and the broader dissemination strategy for the Corrective Publication. The public statement must be drafted to maximize the reputational benefit of the settlement while complying with the confidentiality provisions that prohibit disclosure of the monetary terms.

• Investor Relations: Calderwood & Harkness will coordinate with Janelle Hu, Vice President of Investor Relations, regarding any disclosure obligations arising under Nasdaq listing rules and SEC regulations, including the potential need for a Form 8-K filing to disclose the material terms of the settlement (noting that the monetary terms may need to be disclosed if they are deemed material under applicable SEC guidance, notwithstanding the contractual confidentiality provision). This issue will require careful analysis in coordination with RGC's securities counsel.

F. Papering Timeline Targets

The following table sets forth the key milestones and target dates for the papering phase:

We note that the holiday period between December 23 and January 2 may compress the available negotiation window. We will work to ensure that all drafts are circulated sufficiently in advance to allow for meaningful review by all parties during this period. If necessary, we will request that CTB make their senior attorneys available for working sessions during the week of December 23 to keep the process on track.

G. Calderwood & Harkness Billing Matters

As a matter of engagement-letter compliance, we note the following billing-related items:

• The settlement constitutes a "successful settlement" as defined in the Calderwood & Harkness engagement letter dated March 11, 2024, thereby triggering the 15% success premium on aggregate discounted fees billed to RGC during the course of the representation. Samuel Eklund will prepare a final billing memorandum and success premium calculation upon matter closing.

• Costs advanced by the firm in the amount of $187,450 — comprising expert witness fees (Dr. Vostrikova), deposition transcript costs, and e-discovery vendor charges — are subject to reimbursement by RGC per the terms of the engagement letter. We will include a detailed accounting of these costs in the final billing memorandum.

VI. Open Items and Action Requests

In order to maintain the papering timeline set forth above, we respectfully request that Derek Olafson and the RGC team address the following open items at your earliest convenience:

1. Board Confirmation. Please confirm that RGC's Board of Directors is satisfied with the settlement terms as memorialized in the Mediator's Term Sheet and that no further board approval is required to proceed with the execution of the Settlement Agreement. If the board has any questions or concerns regarding specific terms, we are available to address them promptly.

2. Authorization to Proceed. Please confirm RGC's approval for Calderwood & Harkness to proceed with drafting all settlement documents in accordance with the timeline set forth in Section V above.

3. Identification of Signatory. Please identify the RGC signatory who will execute the Settlement Agreement on behalf of the company. We anticipate that the appropriate signatory would be either Derek Olafson, General Counsel, or Marcus J. Calloway, Chief Executive Officer, and request confirmation of the board's designation.

4. Crestline Equity Partnersordination Meeting. We recommend scheduling a coordination meeting with Crestline Equity Partners Group Inc. (Simone Arecchi) regarding the public announcement strategy and the drafting of the Corrective Publication text. We suggest scheduling this meeting during the week of December 9, 2024, to ensure that the communications strategy is aligned with the papering timeline.

5. Atlas National Insurance Group Notification. We advise that Atlas National Insurance Group, RGC's own directors and officers liability insurer, should be updated on the settlement outcome. Although no claim was triggered on RGC's side under its D&O policy, the company's prior notice to Atlas National regarding the Grizzly Peak litigation should be updated to reflect the resolution of the matter. This is a best-practices step to maintain a clean record with RGC's insurer.

VII. Conclusion

The settlement achieved through the December 3–4, 2024, mediation before the Honorable Gerald K. Matsuda (Ret.) represents a strong result for Redstone Gaming Corp. on both monetary and non-monetary dimensions. The $14.75 million monetary recovery, combined with comprehensive corrective statements directly addressing all three defamatory reports and permanent injunctive relief prohibiting both republication and securities trading, vindicates RGC's position and provides meaningful remediation of the substantial harm caused by Grizzly Peak Research's false and misleading publications.

The settlement terms are consistent with and exceed the minimum settlement parameters authorized by RGC's Board of Directors. The non-monetary components — particularly the Corrective Publication, the social media corrective statement, and the five-year trading bar — represent forms of relief that would have been difficult to obtain at trial and that will serve RGC's long-term interests in restoring its market credibility and deterring future short-and-distort campaigns.

Calderwood & Harkness is prepared to move promptly and efficiently on the papering phase to meet the January 6, 2025, target execution date. Our team — Francesca Morano, Samuel Eklund, and Carlos Espinoza — will be fully available throughout the December period to manage the drafting, negotiation, and finalization of all settlement documents.

Please do not hesitate to contact Francesca Morano (213-555-0147; fmorano@calderwoodharkness.com) or Carlos Espinoza (213-555-0153; cespinoza@calderwoodharkness.com) with any questions, instructions, or comments regarding the matters addressed in this memorandum.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Francesca Morano, Partner Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-0147

Email: fmorano@calderwoodharkness.com

Enclosure: Copy of executed Mediator's Term Sheet (December 4, 2024) (referenced but not reproduced in this memorandum)

This memorandum is a privileged and confidential attorney-client communication prepared by Calderwood & Harkness LLP for the exclusive use of Redstone Gaming Corp. It is protected by the attorney-client privilege and the attorney work-product doctrine. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this document in error, please notify the sender immediately and destroy all copies.

Target Date	Milestone
December 9, 2024	Letter to Caldwell, Tseng & Barrow LLP regarding papering timeline and exchange of drafts
December 10, 2024	Letter to Judge Patricia Yamamoto — Notice of Settlement-in-Principle; request to vacate pending dates
December 12, 2024	Letter to Daniel Royce, Ironclad Surety & Insurance Co. — confirmation of $10.25 million funding commitment and wire-transfer timeline
December 16, 2024	Calderwood & Harkness circulates first draft of Settlement Agreement and all Exhibits (A through D) to Caldwell, Tseng & Barrow LLP
December 18, 2024	CTB returns comments and/or redline of Settlement Agreement and Exhibits
December 23–30, 2024	Negotiate and finalize all settlement documents, including corrective-statement text, escrow agreement, and court filings
January 3, 2025	Wire-transfer instructions transmitted to Great Basin Trust Company, N.A.
January 6, 2025	Target Effective Date: Settlement Agreement executed by all parties
January 13, 2025	Corrective Publication posted on grizzlypeakresearch.com; social media corrective statement posted on @GrizzlyPeakRes (5 business days from Effective Date)
February 5, 2025	Settlement funds ($14.75 million) deposited into escrow at Great Basin Trust Company, N.A. (30 calendar days from Effective Date)
February 19, 2025	Stipulated Dismissal with Prejudice filed with Los Angeles Superior Court (10 business days from Effective Date); Stipulated Permanent Injunction submitted to Judge Yamamoto

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
TO: Derek Olafson, General Counsel, Redstone Gaming Corp.
FROM: Francesca Morano, Calderwood & Harkness LLP
DATE: December 5, 2024
RE: Post-Mediation Report — Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Superior Court of California, County of Los Angeles, Case No. 24STCV-01892
CC: Marcus J. Calloway, CEO, Redstone Gaming Corp.; Samuel Eklund, Calderwood & Harkness LLP; Carlos Espinoza, Calderwood & Harkness LLP
I. Executive Summary
The purpose of this memorandum is to report on the outcome of the two-day mediation conducted on December 3–4, 2024, and to provide a comprehensive summary of the binding Mediator's Term Sheet signed by all parties and their respective counsel on December 4, 2024. This memorandum also sets forth our assessment of the settlement terms, identifies next steps required to finalize the settlement, and proposes a detailed timeline for the "papering" phase.
Bottom-line result: A settlement-in-principle has been reached on terms that we consider highly favorable to Redstone Gaming Corp. ("RGC"). The principal terms include a total monetary payment of $14.75 million to RGC, corrective publications directly addressing all three defamatory research reports published by Grizzly Peak Research LLC ("GPR") in February 2024, and permanent injunctive relief prohibiting both republication of the defamatory statements and trading in RDGM securities by the defendants for a period of five years.
The Mediator's Term Sheet executed on December 4, 2024, is binding on all parties. The next phase of this matter involves drafting and negotiating the formal Settlement Agreement and Mutual Release, together with all ancillary documents, including the text of the corrective statements, the escrow agreement with Great Basin Trust Company, N.A., the stipulated dismissal with prejudice, and the stipulated permanent injunction to be entered by the court. Our target execution date for the Settlement Agreement is January 6, 2025, and we believe this timeline is achievable provided that all parties engage constructively in the papering process over the coming weeks.
This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for the use of the addressee and copy recipients and should not be distributed further without the prior approval of outside counsel.
II. Mediation Background
A. Mediation Logistics
The mediation was conducted over two full days on December 3 and December 4, 2024, at the Westside Mediation Center, located at 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. The mediation was facilitated by the Honorable Gerald K. Matsuda (Ret.), a highly respected former justice of the California Court of Appeal, Second Appellate District, who has extensive experience mediating complex commercial and defamation disputes.
The following individuals attended the mediation on behalf of Plaintiff Redstone Gaming Corp.:
• Francesca Morano, Partner, Calderwood & Harkness LLP — lead outside counsel
• Carlos Espinoza, Associate, Calderwood & Harkness LLP — litigation team member
• Derek Olafson, General Counsel, Redstone Gaming Corp. — corporate representative with settlement authority
• Janelle Hu, Vice President, Investor Relations, Redstone Gaming Corp. — attending in an advisory capacity regarding market impact and communications strategy
• Marcus J. Calloway, CEO, Redstone Gaming Corp. — available by telephone throughout both days and consulted at critical junctures in the negotiation
The following individuals attended the mediation on behalf of Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch:
• Raymond Caldwell, Partner, Caldwell, Tseng & Barrow LLP (555 California Street, Suite 3100, San Francisco, CA 94104) — lead defense counsel
• Natalie Orenstein, Associate, Caldwell, Tseng & Barrow LLP — defense litigation team member
• Tobias Fenchurch, Managing Director and sole member of Grizzly Peak Research LLC and General Partner of Grizzly Peak Capital Partners LP — corporate representative with settlement authority for both GPR entities
• Daniel Royce, Claims Adjuster, Ironclad Surety & Insurance Co. — participating by video conference throughout both days; representing the insurer's interests under Policy No. ML-2023-07714 (D&O / media-liability coverage) and possessing authority to commit insurance-funded settlement contributions
B. Pre-Mediation Posture
Calderwood & Harkness submitted a confidential mediation brief to the Honorable Gerald K. Matsuda on November 27, 2024. The mediation brief detailed RGC's claims for trade libel, defamation per se, intentional interference with prospective economic advantage, and unfair business practices under California Business & Professions Code § 17200 et seq. The brief emphasized the strength of RGC's case on liability, the magnitude of the proven damages, and the complete exoneration of RGC by both the Nevada Gaming Control Board and the United States Securities and Exchange Commission. A copy of the mediation brief was not served on opposing counsel, consistent with the Westside Mediation Center's protocols for confidential submissions.
RGC entered the mediation with board-authorized settlement authority, as memorialized in the Settlement Authority Memorandum dated November 25, 2024, approved by the RGC Board of Directors. The minimum acceptable monetary component under the board's authorization was $12 million, and RGC's negotiating team was further authorized to insist upon meaningful corrective publications and injunctive relief as essential non-monetary components of any resolution.
Our team identified the following key leverage points entering the mediation:
1. Denial of Defendants' Anti-SLAPP Motion. On June 7, 2024, Judge Patricia Yamamoto denied defendants' special motion to strike under California Code of Civil Procedure § 425.16 (the anti-SLAPP statute), finding that RGC had demonstrated a probability of prevailing on its claims. The court's ruling was significant because it rejected defendants' contention that the three research reports constituted protected speech on a matter of public concern. While the court acknowledged the reports touched on matters of public interest, it concluded that RGC had shown sufficient evidence of knowing falsity and actual malice to survive the anti-SLAPP threshold. Defendants did not seek interlocutory appellate review of this order.
2. Denial of Defendants' Motion for Summary Judgment. On November 15, 2024 — less than three weeks before the mediation — Judge Yamamoto denied defendants' motion for summary judgment in its entirety. The court found triable issues of material fact on every element of RGC's trade libel claim, including falsity, knowledge of falsity, and causation. This ruling was a critical development that significantly altered the negotiating dynamic in RGC's favor.
3. Expert Damages Evidence. RGC's retained damages expert, Dr. Elena Vostrikova, Ph.D. (Department of Economics, Columbia University), prepared an event-study analysis estimating total damages attributable to the three reports at $327.6 million. Dr. Vostrikova's methodology isolated the abnormal returns in RDGM stock on the three publication dates and the subsequent trading days, controlling for market-wide and industry-specific factors. Her report was served on November 1, 2024, and defendants did not move to exclude it.
4. RGC's Documented Out-of-Pocket Costs. RGC incurred aggregate out-of-pocket costs of $4.627 million in direct response to the defamatory reports, including $2.18 million in crisis communications and public relations expenses, $1.46 million in internal investigation and forensic audit costs incurred through Pinnacle Audit & Advisory LLC, and $987,000 in regulatory-response costs incurred through Hargrove & Sato LLP for engagement with the Nevada Gaming Control Board and the SEC.
5. GPR's Short-Sale Profits. Documentary evidence obtained in discovery established that Grizzly Peak Capital Partners LP maintained short positions of approximately 680,000 shares of RDGM stock prior to and during the publication of the three reports and realized estimated trading profits of approximately $13.15 million from the decline in RDGM's stock price following the publications. This evidence was central to our claim for disgorgement and to the broader narrative of defendants' financial motivation for publishing the false reports.
6. Regulatory Exoneration. The Nevada Gaming Control Board completed an independent audit of RGC's random number generator ("RNG") systems and cleared RGC on March 29, 2024, finding no evidence of the RNG manipulation alleged in the second GPR report. Similarly, the SEC's Division of Enforcement closed its informal inquiry into RGC's financial reporting on August 16, 2024, with no enforcement action, no comment letter, and no referral — a complete exoneration that undermined the factual predicates of GPR's first and third reports.
Against this backdrop, defendants' primary defense arguments entering the mediation were limited to the following: (i) First Amendment and anti-SLAPP protections (already rejected by the court), (ii) the opinion-privilege defense — i.e., that the reports constituted protected expressions of opinion rather than actionable statements of fact — and (iii) challenges to RGC's causation theory and damages quantum, particularly the argument that RDGM's stock-price decline was attributable to broader market conditions rather than the GPR reports. While these defenses carried some residual trial risk, defendants' bargaining position was materially weakened by the two adverse rulings from Judge Yamamoto and the overwhelming weight of RGC's evidentiary record.
C. Mediation Proceedings Summary
Day 1 — December 3, 2024. The mediation commenced at 9:00 a.m. with an opening joint session in which all parties, counsel, and the mediator were present. Mediator Matsuda provided introductory framework remarks, emphasizing the binding nature of any term sheet executed during the mediation and the confidentiality of the proceedings under California Evidence Code §§ 1115–1128. Following the joint session, the parties separated into private caucuses for the remainder of the day.
During the afternoon caucuses, initial demands and offers were exchanged through the mediator. RGC's opening demand was $45 million in monetary relief plus full corrective publications and permanent injunctive relief. Defendants' initial offer was $3.5 million in total monetary payment, limited to a brief "clarifying statement" to be posted on GPR's website for six months, with no injunctive relief. As expected, there was a significant gap on both monetary terms and the scope of corrective statements at the close of the first day. However, Mediator Matsuda expressed confidence that the gap was bridgeable and encouraged both sides to return the following morning with revised positions.
Day 1 concluded at approximately 7:30 p.m. The mediator met separately with each side before adjournment and communicated his assessment that both parties were negotiating in good faith, though substantial work remained.
Day 2 — December 4, 2024. Caucuses resumed at 9:00 a.m. The morning sessions on Day 2 yielded meaningful progress on the non-monetary terms, particularly the scope and content of the corrective publications and the parameters of the injunctive relief. By approximately 12:30 p.m., the parties had reached substantive agreement on the framework for the corrective statements and the contours of the permanent injunction, including a five-year trading bar that had initially been resisted by defendants.
Monetary negotiations continued through the afternoon with incremental movement on both sides. RGC reduced its demand in stages from $45 million to $22 million and eventually to $16.5 million. Defendants increased their offer in stages from $3.5 million to $8 million, then to $11 million, and ultimately to $13.5 million. At approximately 4:45 p.m., the mediator proposed a final package at $14.75 million, which he characterized as a fair midpoint given the relative strengths and risk profiles of both sides. After separate consultations — including a telephone call between Derek Olafson and Marcus Calloway, and a conference between Raymond Caldwell, Tobias Fenchurch, and Daniel Royce of Ironclad — both sides accepted the mediator's proposal.
The complete settlement package was agreed upon at approximately 6:15 p.m. on December 4, 2024. The Mediator's Term Sheet was thereafter drafted, reviewed, and executed by all parties and their counsel before departure from the mediation center. A copy of the executed Term Sheet is enclosed with this memorandum.
We note that Mediator Matsuda's role was instrumental in bridging the gap, particularly with respect to two issues that threatened to derail the process: (i) the specificity and scope of the corrective-statement language, where the mediator helped craft a framework requiring GPR to acknowledge "material inaccuracies" in all three reports without requiring an outright admission of fraud or malice; and (ii) the duration of the securities-trading injunction, where the mediator persuaded defendants to accept a five-year bar rather than the two-year term they had initially proposed.
III. Summary of Mediator's Term Sheet (Signed December 4, 2024)
The following is a detailed summary of the binding Mediator's Term Sheet executed by all parties and counsel on December 4, 2024. This term sheet governs the parties' obligations pending execution of the formal Settlement Agreement and Mutual Release.
A. Monetary Payment
The Term Sheet provides for a total settlement payment of $14,750,000.00 (Fourteen Million Seven Hundred Fifty Thousand Dollars), payable to Redstone Gaming Corp.
The settlement payment is to be funded from two sources:
• $10,250,000.00 from Ironclad Surety & Insurance Co. ("Ironclad") under the defendants' directors and officers / media-liability insurance policy, Policy No. ML-2023-07714. This contribution represents the insurer's assessment of the available coverage under the claims-made policy, net of applicable retention, and was confirmed during the mediation by Daniel Royce, Ironclad's claims adjuster, following telephone consultation with Ironclad's coverage counsel.
• $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP, jointly and severally. This amount represents the defendants' direct contribution to the settlement and is to be funded from GPR's and GPCP's own resources.
Payment Timeline: All settlement funds — both the Ironclad contribution and the GPR/GPCP contribution — are to be deposited within 30 calendar days of the execution of the Settlement Agreement (the "Effective Date") into an interest-bearing escrow account at Great Basin Trust Company, N.A., located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169. Assuming a January 6, 2025 Effective Date, the escrow deposit deadline would be February 5, 2025.
Assessment Note: The $14.75 million settlement represents approximately 4.5% of Dr. Vostrikova's event-study-adjusted damages estimate of $327.6 million and is obviously a fraction of the approximately $1.427 billion aggregate market-capitalization loss at trough (based on a decline from approximately $25.37 per share to approximately $19.34 per share across RDGM's approximately 73.8 million shares outstanding). However, the settlement amount meaningfully exceeds GPR's estimated short-sale profit of approximately $13.15 million, thereby ensuring a disgorgement-plus recovery. Further, the settlement reflects the practical constraints of the defendants' limited asset base — GPR's and GPCP's combined cash and receivables are estimated at approximately $22 million as of year-end 2024, based on financial documents produced in discovery — and the capacity of Ironclad's policy under its claims-made coverage structure. In our assessment, extracting a recovery that exceeds both the defendants' trading profits and RGC's documented out-of-pocket costs, while also securing comprehensive non-monetary relief, represents an excellent result.
B. Corrective Statements
The corrective-statement provisions of the Term Sheet are among the most important components of the settlement from RGC's strategic and reputational perspective.
1. Corrective Publication (Full Text). Grizzly Peak Research LLC is required to publish a corrective statement (the "Corrective Publication") on its official website, grizzlypeakresearch.com, which is the same platform on which the three original defamatory reports were published and which remains a primary destination for short-seller research within the financial-services community.
Timing: The Corrective Publication must be posted within 5 business days of the Effective Date of the Settlement Agreement. Assuming an Effective Date of January 6, 2025, the target posting date would be January 13, 2025.
Minimum Length: The Corrective Publication must be not fewer than 1,500 words in length, ensuring a substantive and detailed retraction rather than a cursory or perfunctory notice.
Required Content Acknowledgments: The Term Sheet specifies that the Corrective Publication must include, at a minimum, the following acknowledgments:
(a) That the three research reports published by GPR — specifically: (i) "House of Cards: Redstone Gaming's Manufactured Earnings," dated February 7, 2024; (ii) "Rigged Reels: How Redstone's Slot Software Cheats the Regulators," dated February 14, 2024; and (iii) "Double Down on Fraud: Redstone's Related-Party Shell Game," dated February 21, 2024 — contained material inaccuracies.
(b) That the revenue-fabrication allegation contained in the first report — in which GPR claimed that RGC had fabricated approximately $410 million in fiscal-year 2023 revenue — was unfounded.
(c) That the RNG-manipulation allegation contained in the second report — in which GPR alleged that RGC had manipulated its slot-machine random number generator software to deceive state gaming regulators — was disproven by the Nevada Gaming Control Board's independent audit, which was completed on March 29, 2024, and which cleared RGC of all allegations of software manipulation or regulatory non-compliance.
(d) That the related-party allegation contained in the third report — in which GPR alleged that RGC was engaged in fraudulent related-party transactions through an entity called Vermilion Holdings LLC — was based on incomplete information and was misleading.
Duration: The Corrective Publication must remain prominently posted on grizzlypeakresearch.com for a minimum period of 24 months from the date of initial posting, which would require the statement to remain accessible through at least January 2027.
Mutual Approval of Text: The exact text of the Corrective Publication is subject to the mutual approval of both parties during the settlement-papering phase. Calderwood & Harkness will prepare the initial draft, coordinating with RGC's crisis communications advisors at Crestline Equity Partners Group Inc., and will submit the proposed text to Caldwell, Tseng & Barrow for review and negotiation.
2. Social Media Corrective Statement. In addition to the full Corrective Publication on its website, GPR is required to post a summary corrective statement on its social media account, @GrizzlyPeakRes, which is maintained on the X (formerly Fenmore Solutions) platform and which had approximately 142,000 followers at the time of the original publications in February 2024. This social media account was a primary vector through which GPR disseminated its reports and amplified their market impact.
Minimum Length: The social media corrective statement must be not fewer than 280 characters in length.
Content: The social media post must include a direct link to the full Corrective Publication on grizzlypeakresearch.com and must contain a summary acknowledgment of material inaccuracies in the prior reports.
Timing: The social media corrective statement must be posted within 5 business days of the Effective Date, concurrent with the posting of the full Corrective Publication.
Mutual Approval of Text: As with the Corrective Publication, the exact text of the social media corrective statement is subject to the mutual approval of both parties.
C. Permanent Injunction (by Stipulation)
The Term Sheet provides for a stipulated permanent injunction to be submitted to Judge Patricia Yamamoto for entry as an order of the court. The injunctive relief has two principal components:
Republication Injunction: Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch are permanently enjoined from republishing the three reports identified above or any substantially similar statements concerning Redstone Gaming Corp., its officers, its directors, its financial performance, its regulatory compliance, or its gaming technology. This provision eliminates the risk that defendants could repackage or re-disseminate the false narratives in any form, whether on GPR's own platform, through third-party publications, or through social media.
Trading Bar: Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch are permanently enjoined from trading in RDGM securities — including common stock, options, futures, swaps, or any other derivative instruments linked to RDGM — for a period of 5 years from the Effective Date. Assuming an Effective Date of January 6, 2025, this trading bar would remain in effect through January 6, 2030. This provision prevents defendants from establishing new short positions or otherwise profiting from any residual or future negative market sentiment attributable to the original reports or any related activity.
The stipulated permanent injunction is to be submitted to Judge Patricia Yamamoto as a Stipulation and [Proposed] Order for Entry of Permanent Injunction, and Calderwood & Harkness will prepare the initial draft of this document for review by defense counsel.
D. Mutual Releases
The Term Sheet provides for broad mutual releases of all claims, demands, causes of action, liabilities, damages, costs, and expenses arising from or related to (i) the publication of the three reports, (ii) the trading activity of Grizzly Peak Capital Partners LP in RDGM securities, and (iii) the litigation itself (Case No. 24STCV-01892).
The releases are structured to run to and from all parties on both sides of the dispute:
• On the plaintiff's side: Redstone Gaming Corp., including its officers, directors, employees, subsidiaries, affiliates, successors, and assigns.
• On the defendants' side: Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, Grizzly Peak Capital GP LLC (the general partner entity of GPCP), and Tobias Fenchurch, individually, including their respective members, managers, officers, employees, affiliates, successors, and assigns.
Carve-outs: The releases expressly carve out the parties' obligations under the Settlement Agreement itself, ensuring that the settlement terms remain fully enforceable notwithstanding the mutual releases. In addition, claims arising from future conduct (i.e., conduct occurring after the Effective Date) are not released.
E. Non-Disparagement. The Term Sheet includes a mutual non-disparagement clause applicable to both parties. Under this provision, neither party — and neither party's officers, directors, members, employees, or agents — may make any public or private statement that disparages, defames, or casts in a negative light the other party or any of the other party's officers, directors, members, employees, or agents.
The non-disparagement obligation has a term of 3 years from the Effective Date, running through approximately January 6, 2027 (assuming a January 6, 2025 Effective Date). The three-year term was negotiated as a compromise between RGC's preference for a five-year term and defendants' preference for a one-year term.
F. Confidentiality. The Term Sheet draws a deliberate distinction between the monetary terms and the non-monetary terms of the settlement for purposes of confidentiality:
• Confidential: The settlement amount ($14,750,000.00) and the allocation of funding between Ironclad and the GPR entities are confidential. Neither party may disclose the monetary terms of the settlement absent a court order, legal compulsion (e.g., subpoena), or regulatory requirement (e.g., SEC filing obligations). Any required disclosure under securities regulations must be made in the most limited form permissible.
• Not Confidential: The existence of the settlement and the corrective statements are expressly not confidential. Both parties may acknowledge publicly that the litigation has been resolved through a settlement and that GPR has published corrective statements addressing its prior reports. This structure was critical to RGC's objectives, as the reputational value of the settlement depends on RGC's ability to publicize the corrective publications and the resolution of the case.
G. Stipulated Dismissal
The entire action — Case No. 24STCV-01892, including all claims and cross-claims — is to be dismissed with prejudice within 10 business days of the Effective Date. Assuming an Effective Date of January 6, 2025, the target dismissal filing date would be approximately February 19, 2025 (accounting for the Martin Luther King Jr. Day and Presidents' Day holidays).
The stipulated dismissal will include a provision requesting that the court 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 a motion by a party to a settlement if the case is not voluntarily resolved.
H. Attorneys' Fees
Each party shall bear its own attorneys' fees and costs incurred in connection with the litigation and the settlement. This provision is standard for settlements of this nature and avoids the cost and complexity of a contested fee proceeding.
IV. Assessment of Settlement Terms
A. Monetary Recovery
The $14.75 million monetary recovery must be evaluated in context. While the total is a fraction of Dr. Vostrikova's event-study-adjusted damages estimate of $327.6 million and an even smaller fraction of the approximately $1.427 billion aggregate market-capitalization loss at trough (calculated as the difference between RDGM's pre-publication market capitalization of approximately $6.37 billion and the trough market capitalization of approximately $4.95 billion, based on the stock-price decline from $25.37 to $19.34 per share across 73.8 million shares outstanding), the recovery represents a strong outcome when measured against the practical constraints and litigation risks that informed the negotiation.
Several factors support this assessment:
(a) Defendants' Limited Balance Sheet. GPR's and GPCP's combined cash and receivables are estimated at approximately $22 million as of year-end 2024. A judgment exceeding the defendants' ability to pay would have limited practical value. The $4.50 million direct contribution from GPR/GPCP represents approximately 20% of their liquid assets, which is a meaningful and enforceable extraction.
(b) Insurance Policy Limits. Ironclad's $10.25 million contribution reflects the practical capacity of the D&O / media-liability policy (Policy No. ML-2023-07714) after accounting for the applicable self-insured retention and Ironclad's assessment of coverage. Pursuing a bad-faith claim against Ironclad to access additional funds would have been speculative, costly, and would have substantially delayed resolution.
(c) Trial Risks and Uncertainties. Although RGC obtained favorable rulings on both the anti-SLAPP motion and the summary judgment motion, trial remained inherently uncertain. The actual-malice standard applicable to RGC's defamation claim required proof by clear and convincing evidence — a heightened burden that presented real challenges in front of a jury. Defendants' opinion-privilege defense, while we believe it was weak, could not be dismissed as frivolous, and a jury instruction on the distinction between statements of fact and opinion would have created additional uncertainty. Causation presented further complexity, as defendants would have argued that market-wide factors — rather than the GPR reports alone — contributed to RDGM's stock-price decline.
(d) Disgorgement-Plus Result. Critically, the $14.75 million recovery exceeds GPR's estimated short-sale profit of approximately $13.15 million, achieved through the approximately 680,000-share short position maintained by Grizzly Peak Capital Partners LP. The settlement thus achieves more than full disgorgement of the defendants' ill-gotten gains — a result that sends a meaningful deterrent signal.
(e) Recovery of Out-of-Pocket Costs. The recovery substantially exceeds RGC's documented out-of-pocket costs of $4.627 million, which were incurred in direct response to the defamatory reports and included:
• Crisis communications and public relations costs: $2,180,000
• Internal investigation and forensic audit costs (Pinnacle Audit & Advisory LLC): $1,460,000
• Regulatory-response costs (Hargrove & Sato LLP — NGCB and SEC engagement): $987,000
After accounting for these out-of-pocket costs, the net monetary recovery available to RGC is approximately $10.12 million — a sum that provides meaningful additional compensation beyond cost reimbursement.
B. Non-Monetary Relief
The non-monetary components of the settlement are, in many respects, as valuable as the monetary recovery — and potentially more so from a long-term strategic and reputational perspective.
Corrective Publication. The requirement that GPR publish a detailed, 1,500-word corrective statement on grizzlypeakresearch.com — the same platform on which the original false reports were published — is of significant strategic and reputational value. The Corrective Publication directly addresses the three false narratives (revenue fabrication, RNG manipulation, and related-party fraud) that damaged RGC's market credibility and required the company to divert substantial management time and financial resources to crisis response, regulatory engagement, and investor relations. The 24-month posting requirement ensures sustained visibility, and the social media corrective statement via the @GrizzlyPeakRes account (with its approximately 142,000 followers) extends the reach of the correction to the audience that was most directly exposed to the original false reports.
Permanent Injunction on Republication. The stipulated permanent injunction on republication of the three reports or any substantially similar statements eliminates the ongoing risk that GPR could repackage or re-disseminate the defamatory content, whether in updated reports, blog posts, media interviews, or social media postings. This relief is particularly important given GPR's demonstrated willingness to engage in a serial publication strategy — the three reports were released over a period of just 14 days, in a coordinated campaign designed to maximize market impact.
Five-Year Trading Bar. The five-year injunction on trading in RDGM securities by all three defendants prevents GPR and its affiliated entities from establishing new short positions that could be used to profit from any future negative campaign against RGC. The trading bar also serves as a powerful structural deterrent, as it removes any financial incentive for GPR to engage in conduct that could undermine the objectives of the corrective statements.
Market-Cap Recovery. RGC's stock price and market capitalization have partially recovered since the trough in late February/early March 2024. As of early January 2025 (projected), RDGM's market capitalization is estimated at approximately $6.1 billion, representing a recovery from the approximately $4.95 billion trough but still approximately $700 million below the pre-publication level of approximately $6.8 billion. We believe the corrective publications, combined with RGC's ability to publicize the settlement outcome, should contribute to further narrowing of this gap over time.
C. Risk Avoidance
Beyond the affirmative benefits of the settlement, the resolution avoids several material risks and costs:
• Trial Risk. As noted above, the heightened clear-and-convincing-evidence standard for actual malice, the opinion-privilege defense, and the complexities of stock-price-decline causation analysis all presented real — if manageable — risks at trial. A jury verdict for defendants, while unlikely in our assessment, was not inconceivable and would have left RGC with no recovery and significant sunk litigation costs.
• Trial Expense. The estimated cost to RGC of proceeding through trial was $3–5 million in additional attorneys' fees and costs, including expert witness fees for trial preparation and testimony, deposition-video editing, trial graphics, and jury consultants. Settlement avoids these costs entirely.
• Adverse Precedent. A trial loss could have generated adverse precedent in California regarding the scope of First Amendment protections for short-seller research reports. Such precedent could have had implications beyond this case, potentially emboldening other short-seller operations to target RGC or similarly situated companies with impunity.
• Continued Reputational Uncertainty. Absent a settlement, the ongoing pendency of the litigation would have continued to serve as an overhang on RGC's stock price and market perception, as analysts and investors would have been unable to assess the ultimate outcome of the dispute.
V. Next Steps — Settlement Papering Timeline
The binding Term Sheet provides the framework for the formal settlement documents that must now be drafted, negotiated, and executed. The following outlines the documents to be prepared, the key procedural steps, and the proposed timeline for completing the papering phase.
A. Documents to Be Drafted and Exchanged
Calderwood & Harkness will take the lead in preparing the initial drafts of all settlement documents, which will be circulated to Caldwell, Tseng & Barrow LLP ("CTB") for review and comment. The documents to be prepared are as follows:
1. Settlement Agreement and Mutual Release. This is the master agreement governing all aspects of the settlement, including the monetary payment terms, corrective statement obligations, injunctive relief provisions, mutual releases, non-disparagement clause, confidentiality provisions, and dismissal mechanics. Calderwood & Harkness will prepare the initial draft and circulate it to CTB. Target first draft: December 16, 2024.
2. Exhibit A: Corrective Publication (Full Text). Calderwood & Harkness will prepare the initial draft of the 1,500-word Corrective Publication, incorporating the required acknowledgments specified in the Term Sheet. The draft will be prepared in close coordination with Crestline Equity Partners Group Inc. (contact: Simone Arecchi) to ensure that the language is both legally sufficient and optimally crafted for maximum reputational impact.
3. Exhibit B: Social Media Corrective Statement. Calderwood & Harkness will prepare the initial draft of the summary corrective statement for posting on @GrizzlyPeakRes, again coordinating with Ashgrove Equity Partners on messaging strategy and format.
4. Exhibit C: Form of Stipulated Dismissal with Prejudice. Calderwood & Harkness will prepare the standard-form stipulated dismissal for Case No. 24STCV-01892, including the § 664.6 retention-of-jurisdiction provision.
5. Exhibit D: Form of Stipulated Permanent Injunction. Calderwood & Harkness will prepare the stipulated permanent injunction for submission to Judge Yamamoto, encompassing both the republication injunction and the five-year trading bar. This document will be styled as a Stipulation and [Proposed] Order for Entry of Permanent Injunction.
6. Escrow Agreement. A separate escrow agreement among Redstone Gaming Corp., Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Great Basin Trust Company, N.A., governing the deposit, holding, and disbursement of the $14.75 million settlement funds. Calderwood & Harkness will coordinate with Great Basin Trust Company regarding their standard form escrow agreement and will negotiate any necessary modifications.
7. Stipulation and [Proposed] Order for Dismissal with Prejudice. This is the court-filing version of the dismissal stipulation, for filing with the Los Angeles Superior Court.
8. Stipulation and [Proposed] Order for Entry of Permanent Injunction. This is the court-filing version of the permanent injunction, for filing with the Los Angeles Superior Court.
B. Court Notifications
A letter will be sent to Judge Patricia Yamamoto notifying the court that the parties have reached a settlement-in-principle and requesting that all pending dates — including the trial date and any remaining pretrial deadlines — be vacated. The letter will also request the scheduling of a hearing for entry of the stipulated dismissal and permanent injunction at the appropriate time. This letter must be sent no later than December 10, 2024, to comply with the court's standing order regarding notification of settlements.
C. Insurance Coordination
A letter will be sent to Daniel Royce, Claims Adjuster, Ironclad Surety & Insurance Co., confirming the settlement terms as agreed at mediation and requesting written confirmation of Ironclad's commitment to fund $10,250,000.00 under Policy No. ML-2023-07714. The letter will also request Ironclad's wire-transfer timeline and identify any documentation or releases that Ironclad may require as conditions precedent to funding. This letter must be sent no later than December 12, 2024, to ensure that the insurance-funding process proceeds on a timeline consistent with the 30-day escrow deposit deadline.
D. Escrow Setup
Calderwood & Harkness will engage Great Basin Trust Company, N.A. to open the escrow account and will coordinate wire-transfer instructions for both funding sources:
• $10,250,000.00 from Ironclad Surety & Insurance Co.
• $4,500,000.00 from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP (jointly and severally)
The escrow deposit deadline is 30 calendar days from execution of the Settlement Agreement. Assuming a January 6, 2025 Effective Date, the target escrow deposit deadline is February 5, 2025. Great Basin Trust Company's standard escrow fees and the allocation of such fees between the parties will be addressed in the Escrow Agreement.
E. Communications and PR
RGC's public communications strategy surrounding the settlement will require careful coordination:
• Crestline Equity Partners Group Inc. (contact: Simone Arecchi): Calderwood & Harkness will coordinate with Ashgrove Equity Partners regarding the preparation of RGC's public statement upon settlement execution and the broader dissemination strategy for the Corrective Publication. The public statement must be drafted to maximize the reputational benefit of the settlement while complying with the confidentiality provisions that prohibit disclosure of the monetary terms.
• Investor Relations: Calderwood & Harkness will coordinate with Janelle Hu, Vice President of Investor Relations, regarding any disclosure obligations arising under Nasdaq listing rules and SEC regulations, including the potential need for a Form 8-K filing to disclose the material terms of the settlement (noting that the monetary terms may need to be disclosed if they are deemed material under applicable SEC guidance, notwithstanding the contractual confidentiality provision). This issue will require careful analysis in coordination with RGC's securities counsel.
F. Papering Timeline Targets
The following table sets forth the key milestones and target dates for the papering phase:
We note that the holiday period between December 23 and January 2 may compress the available negotiation window. We will work to ensure that all drafts are circulated sufficiently in advance to allow for meaningful review by all parties during this period. If necessary, we will request that CTB make their senior attorneys available for working sessions during the week of December 23 to keep the process on track.
G. Calderwood & Harkness Billing Matters
As a matter of engagement-letter compliance, we note the following billing-related items:
• The settlement constitutes a "successful settlement" as defined in the Calderwood & Harkness engagement letter dated March 11, 2024, thereby triggering the 15% success premium on aggregate discounted fees billed to RGC during the course of the representation. Samuel Eklund will prepare a final billing memorandum and success premium calculation upon matter closing.
• Costs advanced by the firm in the amount of $187,450 — comprising expert witness fees (Dr. Vostrikova), deposition transcript costs, and e-discovery vendor charges — are subject to reimbursement by RGC per the terms of the engagement letter. We will include a detailed accounting of these costs in the final billing memorandum.
VI. Open Items and Action Requests
In order to maintain the papering timeline set forth above, we respectfully request that Derek Olafson and the RGC team address the following open items at your earliest convenience:
1. Board Confirmation. Please confirm that RGC's Board of Directors is satisfied with the settlement terms as memorialized in the Mediator's Term Sheet and that no further board approval is required to proceed with the execution of the Settlement Agreement. If the board has any questions or concerns regarding specific terms, we are available to address them promptly.
2. Authorization to Proceed. Please confirm RGC's approval for Calderwood & Harkness to proceed with drafting all settlement documents in accordance with the timeline set forth in Section V above.
3. Identification of Signatory. Please identify the RGC signatory who will execute the Settlement Agreement on behalf of the company. We anticipate that the appropriate signatory would be either Derek Olafson, General Counsel, or Marcus J. Calloway, Chief Executive Officer, and request confirmation of the board's designation.
4. Crestline Equity Partnersordination Meeting. We recommend scheduling a coordination meeting with Crestline Equity Partners Group Inc. (Simone Arecchi) regarding the public announcement strategy and the drafting of the Corrective Publication text. We suggest scheduling this meeting during the week of December 9, 2024, to ensure that the communications strategy is aligned with the papering timeline.
5. Atlas National Insurance Group Notification. We advise that Atlas National Insurance Group, RGC's own directors and officers liability insurer, should be updated on the settlement outcome. Although no claim was triggered on RGC's side under its D&O policy, the company's prior notice to Atlas National regarding the Grizzly Peak litigation should be updated to reflect the resolution of the matter. This is a best-practices step to maintain a clean record with RGC's insurer.
VII. Conclusion
The settlement achieved through the December 3–4, 2024, mediation before the Honorable Gerald K. Matsuda (Ret.) represents a strong result for Redstone Gaming Corp. on both monetary and non-monetary dimensions. The $14.75 million monetary recovery, combined with comprehensive corrective statements directly addressing all three defamatory reports and permanent injunctive relief prohibiting both republication and securities trading, vindicates RGC's position and provides meaningful remediation of the substantial harm caused by Grizzly Peak Research's false and misleading publications.
The settlement terms are consistent with and exceed the minimum settlement parameters authorized by RGC's Board of Directors. The non-monetary components — particularly the Corrective Publication, the social media corrective statement, and the five-year trading bar — represent forms of relief that would have been difficult to obtain at trial and that will serve RGC's long-term interests in restoring its market credibility and deterring future short-and-distort campaigns.
Calderwood & Harkness is prepared to move promptly and efficiently on the papering phase to meet the January 6, 2025, target execution date. Our team — Francesca Morano, Samuel Eklund, and Carlos Espinoza — will be fully available throughout the December period to manage the drafting, negotiation, and finalization of all settlement documents.
Please do not hesitate to contact Francesca Morano (213-555-0147; fmorano@calderwoodharkness.com) or Carlos Espinoza (213-555-0153; cespinoza@calderwoodharkness.com) with any questions, instructions, or comments regarding the matters addressed in this memorandum.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano, Partner Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, California 90071 Telephone: (213) 555-0147
Email: fmorano@calderwoodharkness.com
Enclosure: Copy of executed Mediator's Term Sheet (December 4, 2024) (referenced but not reproduced in this memorandum)
This memorandum is a privileged and confidential attorney-client communication prepared by Calderwood & Harkness LLP for the exclusive use of Redstone Gaming Corp. It is protected by the attorney-client privilege and the attorney work-product doctrine. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this document in error, please notify the sender immediately and destroy all copies.
Target Date | Milestone
December 9, 2024 | Letter to Caldwell, Tseng & Barrow LLP regarding papering timeline and exchange of drafts
December 10, 2024 | Letter to Judge Patricia Yamamoto — Notice of Settlement-in-Principle; request to vacate pending dates
December 12, 2024 | Letter to Daniel Royce, Ironclad Surety & Insurance Co. — confirmation of $10.25 million funding commitment and wire-transfer timeline
December 16, 2024 | Calderwood & Harkness circulates first draft of Settlement Agreement and all Exhibits (A through D) to Caldwell, Tseng & Barrow LLP
December 18, 2024 | CTB returns comments and/or redline of Settlement Agreement and Exhibits
December 23–30, 2024 | Negotiate and finalize all settlement documents, including corrective-statement text, escrow agreement, and court filings
January 3, 2025 | Wire-transfer instructions transmitted to Great Basin Trust Company, N.A.
January 6, 2025 | Target Effective Date: Settlement Agreement executed by all parties
January 13, 2025 | Corrective Publication posted on grizzlypeakresearch.com; social media corrective statement posted on @GrizzlyPeakRes (5 business days from Effective Date)
February 5, 2025 | Settlement funds ($14.75 million) deposited into escrow at Great Basin Trust Company, N.A. (30 calendar days from Effective Date)
February 19, 2025 | Stipulated Dismissal with Prejudice filed with Los Angeles Superior Court (10 business days from Effective Date); Stipulated Permanent Injunction submitted to Judge Yamamoto

MEMORANDUM

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts