Natalie,
Thank you for circulating Caldwell, Tseng & Barrow's initial draft of the Settlement Agreement and Mutual Release. We have completed our review on behalf of Redstone Gaming Corp. and are transmitting with this email a redline with tracked changes reflecting Calderwood & Harkness's comments and proposed revisions. Please see the attached file: **Settlement Agreement and Mutual Release — Calderwood & Harkness Redline (12.18.2024).docx**.
As you know, all provisions have been measured against the binding Mediator's Term Sheet signed by the parties on December 4, 2024, which remains the governing framework for the settlement. Where we have proposed revisions, it is either to conform the draft language to the Term Sheet or to address matters on which the draft was silent or insufficiently specific in ways that affect Redstone's interests. Given the target execution date of January 6, 2025, we would appreciate a prompt turnaround on the next draft so that neither side is pressed for time over the holidays.
Our comments are organized below by topic area for ease of reference before you turn to the redline itself.
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**1. Scope of Permanent Injunction**
CTB's draft defined the permanent injunction too narrowly, limiting it to the three specific Grizzly Peak Research reports identified by title only: *"House of Cards: Redstone Gaming's Manufactured Earnings," "Rigged Reels: How Redstone's Slot Software Cheats the Regulators,"* and *"Double Down on Fraud: Redstone's Related-Party Shell Game."* Our redline expands the injunction to cover not only the republication of those three reports but also any "substantially similar statements" concerning Redstone Gaming Corp. We have inserted a definition of "substantially similar statements" designed to capture repackaged, paraphrased, or derivative versions of the same false allegations—specifically, the revenue-fabrication claims, the RNG-manipulation claims, and the related-party shell-dealing allegations involving Vermilion Holdings LLC.
The injunction must bind all three defendants—Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch individually—and we have confirmed this throughout the redline.
Additionally, CTB's draft omitted the Term Sheet's requirement that the 5-year securities trading bar (running through January 6, 2030) expressly cover RDGM securities *including derivatives*. We have added the derivatives language back in to conform to the Term Sheet.
Finally, because the injunction is to be submitted to Judge Patricia Yamamoto in the Superior Court of California, County of Los Angeles, as a stipulated order, the draft must reference the court and the procedure for entry. We have added appropriate language.
**2. Corrective Statement Adequacy**
CTB's draft left the text of the Corrective Publication somewhat vague. Our redline cross-references the full text in **Exhibit A**, which we are circulating separately and which must be mutually approved before execution. Consistent with the Term Sheet, the Corrective Publication must be no fewer than 1,500 words and must specifically:
(a) acknowledge that all three reports contained material inaccuracies; (b) state that the revenue-fabrication allegation of approximately $410 million was unfounded; (c) state that the RNG-manipulation allegation was disproven by the Nevada Gaming Control Board, which cleared Redstone on March 29, 2024; and (d) state that the related-party allegation concerning Vermilion Holdings LLC was based on incomplete information and was misleading.
The Corrective Publication must be posted on grizzlypeakresearch.com within 5 business days of the Effective Date (target: January 13, 2025) and must remain posted for not less than 24 months (i.e., through at least January 6, 2027).
With respect to the social media corrective statement (**Exhibit B**), CTB's draft did not specify a character minimum or require a hyperlink to the full Corrective Publication. Our redline adds both: the post on the @GrizzlyPeakRes account must be not fewer than 280 characters and must include a direct link to the full Corrective Publication on grizzlypeakresearch.com.
We have also added a compliance-verification mechanism permitting Redstone to request a screenshot or URL confirmation within 10 business days of the applicable posting deadline.
**3. Non-Disparagement Carve-Outs**
CTB's draft included a mutual non-disparagement clause with a 3-year term (expiring January 6, 2027, assuming an Effective Date of January 6, 2025), which is consistent with the Term Sheet. However, the carve-outs on the defendant side were overbroad. As drafted, they would have permitted the defendants to characterize the settlement publicly as vindicating their research methodology—a result plainly inconsistent with the corrective-statement obligations.
Our redline narrows the permissible carve-outs to: (a) truthful statements required by law, regulation, or legal process; (b) statements necessary to comply with the Settlement Agreement itself, including the corrective statements; and (c) privileged communications with legal counsel.
On the plaintiff side, we have added a carve-out to protect Redstone's ability to make factual statements regarding the resolution of this matter to regulators (including the Nevada Gaming Control Board), investors, and Redstone's independent auditor, Pinnacle Audit & Advisory LLP.
**4. Escrow-Disbursement Mechanics**
The Settlement Agreement must clearly reflect the two funding sources and their respective obligations:
- **$10,250,000.00** from Ironclad Surety & Insurance Co. under Policy No. ML-2023-07714; and - **$4,500,000.00** from Grizzly Peak Research LLC and Grizzly Peak Capital Partners LP, jointly and severally.
The total settlement amount of **$14,750,000.00** is to be deposited into escrow at Great Basin Trust Company, N.A. (3960 Howard Hughes Parkway, Suite 500, Las Vegas, NV 89169) within 30 calendar days of execution of the Settlement Agreement (i.e., by February 5, 2025).
CTB's draft was silent on the mechanics if one funding source deposits before the other. Our redline adds language requiring that all funds be held in escrow until the full $14,750,000.00 is received before any disbursement to Redstone. We have also added a provision specifying that any late payment beyond the 30-calendar-day deadline will trigger interest at the California statutory post-judgment rate.
Wire transfer instructions will be provided by separate letter to Great Basin Trust Company, which we will circulate closer to the Effective Date. The redline also cross-references the Escrow Agreement that is being negotiated in parallel.
**5. Mutual Releases**
We generally accept the broad mutual release framework in CTB's draft. Our redline tightens the carve-out language to make explicit that obligations arising under the Settlement Agreement itself, the Escrow Agreement, the stipulated permanent injunction, and the corrective-statement requirements are excluded from the scope of the release.
We have also added language confirming that the releases encompass all claims arising from the three GPR publications and the litigation in Case No. 24STCV-01892, including the causes of action pleaded in the First Amended Complaint: trade libel, intentional interference with prospective economic advantage, unfair business practices (Cal. Bus. & Prof. Code § 17200 et seq.), and negligent misrepresentation.
**6. Confidentiality Provision**
Per the Term Sheet, the settlement amount ($14.75 million) is confidential, but the existence of the settlement and the corrective statements are not. CTB's draft adequately captured this framework. We have made minor clarifying edits to more precisely distinguish between the monetary terms (confidential) and the non-monetary terms (not confidential) to avoid any ambiguity in application.
**7. Stipulated Dismissal and Retention of Jurisdiction**
The stipulated dismissal with prejudice must be filed within 10 business days of the Effective Date (target: February 19, 2025). The draft must expressly provide for the Superior Court's retention of jurisdiction to enforce the Settlement Agreement pursuant to Cal. Code Civ. Proc. § 664.6. Our redline adds this language where it was insufficiently specific.
Each party bears its own attorneys' fees and costs—we confirmed this is in CTB's draft and have no changes on that point.
The redline cross-references **Exhibit C** (Form of Stipulated Dismissal) and **Exhibit D** (Form of Stipulated Permanent Injunction), both of which are attached to the Settlement Agreement.
**8. Governing Law**
The Settlement Agreement is governed by the laws of the State of California. No change from CTB's draft on this point.
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We would appreciate it if your team could review the redline and provide either a revised draft or substantive responses to the comments above **by no later than Friday, December 27, 2024**, so that we remain on track for the January 6 execution target.
On our end, Calderwood & Harkness is separately preparing drafts of the Escrow Agreement with Great Basin Trust Company and the wire transfer instructions. We expect to circulate those documents in early January.
If it would be helpful, I am happy to schedule a call with you and Raymond to walk through any of these comments in greater detail. Please don't hesitate to reach out.
Best regards,
**Carlos Espinoza** Calderwood & Harkness LLP 333 South Grand Avenue, Suite 4800 Los Angeles, CA 90071 Direct: (213) 555-0174 Email: cespinoza@calderwoodharkness.com
**Attachment:** Settlement Agreement and Mutual Release — Calderwood & Harkness Redline (12.18.2024).docx
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