SETTLEMENT AGREEMENT AND MUTUAL RELEASE
Dated as of January 6, 2025
Among
REDSTONE GAMING CORP., a Nevada corporation,
GRIZZLY PEAK RESEARCH LLC, a Delaware limited liability company,
GRIZZLY PEAK CAPITAL PARTNERS LP, a Delaware limited partnership,
and
TOBIAS FENCHURCH, an individual
In Resolution of
Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Superior Court of California, County of Los Angeles, Case No. 24STCV-01892
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This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered into as of January 6, 2025 (the "Effective Date"), by and among the following parties:
1. Redstone Gaming Corp., a Nevada corporation ("Plaintiff" or "RGC");
2. Grizzly Peak Research LLC, a Delaware limited liability company ("GPR");
3. Grizzly Peak Capital Partners LP, a Delaware limited partnership ("GPCP"); and
4. Tobias Fenchurch, an individual ("Fenchurch").
GPR, GPCP, and Fenchurch are referred to collectively herein as the "Defendants." RGC and Defendants are referred to collectively herein as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, this Agreement is made with reference to the following facts and circumstances:
A. The Parties.
RGC is a corporation duly organized and existing under the laws of the State of Nevada, whose common stock is publicly traded on the Nasdaq Global Select Market under the ticker symbol "RDGM." RGC maintains its principal executive offices at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113, and bears Employer Identification Number 88-0412793. RGC owns and operates eleven casino-resort properties located across the States of Nevada, New Jersey, and Mississippi, and licenses proprietary electronic gaming platforms to third-party casino operators. RGC also operates two wholly owned business units: Redstone Digital, an interactive gaming and iGaming division, and Crimson Studios, a media and entertainment production subsidiary.
GPR is a limited liability company duly organized and existing under the laws of the State of Delaware, with its principal office located at 44 Maiden Lane, 7th Floor, San Francisco, California 94108, bearing Employer Identification Number 85-3291064. GPR's registered agent in Delaware is Pacific Corporate Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. GPR is in the business of researching and publishing reports concerning publicly traded companies, frequently taking and disclosing short positions in the securities of the companies that are the subjects of its reports.
GPCP is a limited partnership duly organized and existing under the laws of the State of Delaware, bearing Employer Identification Number 85-3291078. The general partner of GPCP is Grizzly Peak Capital GP LLC, a Delaware limited liability company whose sole managing member is Tobias Fenchurch. GPCP operates as an affiliated hedge fund that, during the relevant time period, held short positions in the common stock of RGC (Nasdaq: RDGM).
Fenchurch is an individual who serves as the Managing Member of GPR and as the sole managing member of Grizzly Peak Capital GP LLC, the general partner of GPCP. Fenchurch was named as an individual defendant in the Action (as defined below).
B. The Action.
On February 5, 2024, RGC filed a complaint (the "Original Complaint") against GPR in the Superior Court of California, County of Los Angeles, initiating the civil action captioned Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Case No. 24STCV-01892 (the "Action"). The Original Complaint asserted three causes of action: (1) Trade Libel pursuant to California Civil Code Section 46(3); (2) Intentional Interference with Prospective Economic Advantage; and (3) Unfair Business Practices pursuant to California Business and Professions Code Section 17200 et seq.
On March 18, 2024, RGC filed its First Amended Complaint (the "FAC"), adding GPCP and Fenchurch as defendants and asserting a fourth cause of action for Negligent Misrepresentation. The FAC is the operative complaint in the Action as of the Effective Date.
C. The Publications.
During the period from February 7, 2024, through February 21, 2024, GPR published three research reports via the website grizzlypeakresearch.com and promoted such reports through the social-media account @GrizzlyPeakRes, which had approximately 142,000 followers at the time of publication. Those reports were as follows:
(i) "House of Cards: Redstone Gaming's Manufactured Earnings," published on February 7, 2024, consisting of approximately 48 pages ("Report 1");
(ii) "Rigged Reels: How Redstone's Slot Software Cheats the Regulators," published on February 14, 2024, consisting of approximately 36 pages ("Report 2"); and
(iii) "Double Down on Fraud: Redstone's Related-Party Shell Game," published on February 21, 2024, consisting of approximately 29 pages ("Report 3").
Report 1, Report 2, and Report 3 are referred to collectively herein as the "Reports."
The Reports alleged, among other things: (a) that RGC had fabricated approximately $410 million in fiscal year 2023 revenue through fictitious intercompany transactions; (b) that RGC had manipulated its proprietary random-number-generator ("RNG") software to inflate payout statistics reported to the Nevada Gaming Control Board; and (c) that RGC had engaged in undisclosed related-party dealings between its Chief Executive Officer, Marcus J. Calloway, and a purported shell entity known as Vermilion Holdings LLC. Each Report disclosed that GPR held short positions in RDGM common stock. At the time of publication, GPR and GPCP collectively held approximately 680,000 shares of RDGM common stock sold short.
D. The Litigation History.
On April 12, 2024, Defendants filed a special motion to strike under the California anti-SLAPP statute, California Code of Civil Procedure Section 425.16, seeking to dismiss all claims in the FAC. On June 7, 2024, the Honorable Patricia Yamamoto denied Defendants' anti-SLAPP motion in its entirety, finding that RGC had demonstrated a probability of prevailing on its claims.
From June through November 2024, the Parties engaged in extensive discovery, including fourteen (14) fact and expert depositions, the production of approximately 87,000 documents, and three contested discovery motions, all of which were resolved by the Court.
On September 9, 2024, the Parties exchanged expert reports pursuant to the Court's scheduling order. RGC's experts included a damages expert, a forensic accounting expert, and a securities-market expert; Defendants' experts included a First Amendment expert and a market-impact expert.
On October 22, 2024, Defendants filed a motion for summary judgment, or, in the alternative, summary adjudication. On November 15, 2024, the Court denied Defendants' motion in its entirety.
During the course of the litigation, the Nevada Gaming Control Board completed an independent audit of RGC's RNG software and systems. The audit was concluded on March 29, 2024, and the Nevada Gaming Control Board publicly announced that RGC's RNG systems were fully compliant with all applicable regulations and that no evidence of manipulation or tampering was found. Additionally, the United States Securities and Exchange Commission (the "SEC") opened an informal inquiry into certain of the matters raised in the Reports in or about March 2024. The SEC closed that inquiry on August 16, 2024, with no enforcement action, no formal order of investigation, and no adverse findings against RGC or any of its officers or directors.
E. The Mediation and Term Sheet.
On December 3 and December 4, 2024, the Parties participated in a mediation before the Honorable Gerald K. Matsuda (Ret.), conducted at the Westside Mediation Center, 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. At the conclusion of the mediation on December 4, 2024, the Parties executed a binding Mediator's Term Sheet (the "Term Sheet"), which memorialized the principal terms and conditions upon which the Parties agreed to settle and resolve the Action and all claims between them. The Parties now desire to fully and finally resolve all claims, disputes, and controversies between and among them arising from or relating to the Reports, the Action, and the subject matter thereof, on the terms and conditions set forth in this Agreement.
F. Representation by Counsel.
RGC has been represented throughout the Action and in the negotiation and execution of this Agreement by Calderwood & Harkness LLP, 333 South Grand Avenue, Suite 4800, Los Angeles, California 90071 (lead counsel: Francesca Morano, Partner). Defendants have been represented throughout the Action and in the negotiation and execution of this Agreement by Caldwell, Tseng & Barrow LLP, 555 California Street, Suite 3100, San Francisco, California 94104 (lead counsel: Raymond Caldwell, Partner). Each Party acknowledges that it has had the opportunity to consult with counsel of its choosing regarding all aspects of this Agreement and the settlement embodied herein.
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms.
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 1.1 shall have the meanings ascribed to them elsewhere in this Agreement, including in the Recitals.
(a) "Action" means the civil action captioned Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Case No. 24STCV-01892, pending in the Superior Court of California, County of Los Angeles, including all claims, causes of action, and proceedings asserted therein, from the filing of the Original Complaint through and including the date of this Agreement.
(b) "Corrective Publication" means the corrective statement to be published by GPR on the website grizzlypeakresearch.com as described in Section 3.1 of this Agreement, in the form and content set forth in Exhibit A attached hereto and incorporated herein by reference.
(c) "Court" means the Superior Court of the State of California, County of Los Angeles.
(d) "Defendants" means GPR, GPCP, and Fenchurch, collectively, and their respective successors and assigns.
(e) "Direct Contribution" means the sum of Four Million Five Hundred Thousand Dollars ($4,500,000.00) to be paid by GPR and GPCP, jointly and severally, as part of the Settlement Amount, as more particularly described in Section 2.2(b) of this Agreement.
(f) "Effective Date" means January 6, 2025, the date on which all Parties have executed and delivered this Agreement.
(g) "Escrow Agent" means Great Basin Trust Company, N.A., a national trust company organized and existing under the laws of the United States, with its principal office located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.
(h) "Escrow Agreement" means the Escrow Agreement of even date herewith, entered into among RGC, GPR, GPCP, and the Escrow Agent, establishing the terms and conditions governing the escrow account into which the Settlement Amount shall be deposited and from which the Settlement Amount shall be disbursed.
(i) "Insurance Contribution" means the sum of Ten Million Two Hundred Fifty Thousand Dollars ($10,250,000.00) to be paid by Ironclad Surety & Insurance Co. under directors-and-officers / media-liability Policy No. ML-2023-07714, as more particularly described in Section 2.2(a) of this Agreement.
(j) "Ironclad" means Ironclad Surety & Insurance Co., a New York-domiciled insurance company, with its principal office located at 200 Park Avenue South, 14th Floor, New York, New York 10003.
(k) "Mediator's Term Sheet" or "Term Sheet" means the binding term sheet executed by the Parties on December 4, 2024, at the conclusion of the mediation before Hon. Gerald K. Matsuda (Ret.), memorializing the principal terms and conditions of the settlement of the Action.
(l) "RDGM Securities" means any equity securities of RGC, including, without limitation, shares of common stock (Nasdaq: RDGM), options to purchase or sell shares of common stock, warrants, convertible instruments, and any and all derivative instruments referencing, based upon, or relating to any of the foregoing.
(m) "Released Claims" has the meaning set forth in Section 5.1 of this Agreement.
(n) "Reports" means Report 1, Report 2, and Report 3, as defined and described in Recital C of this Agreement.
(o) "Settlement Amount" means the aggregate sum of Fourteen Million Seven Hundred Fifty Thousand Dollars ($14,750,000.00) to be paid to RGC in full and final settlement of the Action and the Released Claims, as more particularly described in Article 2 of this Agreement.
(p) "Social Media Corrective" means the summary corrective statement to be posted by GPR on the @GrizzlyPeakRes social-media account as described in Section 3.2 of this Agreement, in the form and content set forth in Exhibit B attached hereto and incorporated herein by reference.
(q) "Stipulated Dismissal" means the Stipulation and [Proposed] Order for Dismissal with Prejudice to be filed with the Court in the form attached hereto as Exhibit C, providing for the dismissal of the Action with prejudice as to all Parties and all claims.
(r) "Stipulated Injunction" means the Stipulation and [Proposed] Order for Entry of Permanent Injunction to be submitted to the Court for entry in the form attached hereto as Exhibit D, containing the injunctive relief provisions described in Article 4 of this Agreement.
(s) "Substantially Similar Statements" means any and all statements, whether written, oral, electronic, or in any other medium, that repeat, restate, paraphrase, or convey the substance or material import of any of the allegations set forth in the Reports regarding (i) the fabrication or inflation of revenue by RGC through fictitious or improper intercompany transactions, (ii) the manipulation of RNG software or systems by RGC or any of its officers, directors, employees, or agents, or (iii) undisclosed related-party transactions involving RGC, any of its officers or directors, or any entity affiliated with or controlled by any of its officers or directors, including but not limited to Marcus J. Calloway and Vermilion Holdings LLC.
ARTICLE 2 — MONETARY PAYMENT
Section 2.1 — Settlement Amount.
In consideration of the mutual releases, covenants, and agreements set forth in this Agreement, Defendants shall cause the payment of the aggregate sum of Fourteen Million Seven Hundred Fifty Thousand Dollars ($14,750,000.00) to RGC (the "Settlement Amount"). The Settlement Amount represents the total and complete monetary consideration to be paid in connection with the settlement of the Action and the Released Claims, and no additional monetary payments shall be owed by Defendants or any other person or entity to RGC in connection with this settlement.
Section 2.2 — Sources of Funding.
The Settlement Amount shall be funded from the following two sources:
(a) Insurance Contribution. The sum of Ten Million Two Hundred Fifty Thousand Dollars ($10,250,000.00) shall be paid by Ironclad Surety & Insurance Co. pursuant to the terms of directors-and-officers / media-liability insurance Policy No. ML-2023-07714, issued by Ironclad to GPR and GPCP (the "Insurance Contribution"). The Insurance Contribution represents the settlement allocation approved by Ironclad and agreed to by Defendants and RGC.
(b) Direct Contribution. The sum of Four Million Five Hundred Thousand Dollars ($4,500,000.00) shall be paid by GPR and GPCP, jointly and severally (the "Direct Contribution"). The obligation to fund the Direct Contribution is the joint and several obligation of GPR and GPCP, and either entity may satisfy the obligation on behalf of both. Fenchurch shall not be individually liable for the Direct Contribution except to the extent he is liable as the managing member of GPR or through the general partner of GPCP in accordance with applicable law.
Section 2.3 — Deposit into Escrow.
Within thirty (30) calendar days of the Effective Date (i.e., on or before February 5, 2025), all components of the Settlement Amount shall be deposited into the escrow account established at Great Basin Trust Company, N.A. pursuant to the Escrow Agreement. Specifically:
(a) The Insurance Contribution of $10,250,000.00 shall be wired directly by Ironclad to the Escrow Agent in accordance with the wire transfer instructions set forth in the Escrow Agreement. Defendants shall provide Ironclad with all necessary authorizations, documentation, and consents to effectuate such wire transfer and shall use reasonable best efforts to cause Ironclad to complete such wire transfer within the time period prescribed herein.
(b) The Direct Contribution of $4,500,000.00 shall be wired by GPR and/or GPCP to the Escrow Agent in accordance with the wire transfer instructions set forth in the Escrow Agreement. GPR and GPCP shall coordinate the timing of such wire transfer to ensure that the Direct Contribution is deposited into the escrow account on or before February 5, 2025.
Section 2.4 — Disbursement from Escrow.
Upon confirmation by the Escrow Agent that the full Settlement Amount of $14,750,000.00 has been deposited into the escrow account, and subject to the terms and conditions of the Escrow Agreement, the Escrow Agent shall disburse the Settlement Amount to RGC (or as directed by RGC in written wire transfer instructions) within five (5) business days of such confirmation. RGC shall provide the Escrow Agent with complete and accurate wire transfer instructions in advance of disbursement. The Parties agree that no disbursement shall be made until the Escrow Agent has confirmed receipt of the full Settlement Amount, and partial disbursements shall not be permitted absent the prior written agreement of all Parties and the Escrow Agent.
Section 2.5 — Late Payment.
In the event that any portion of the Settlement Amount is not deposited into the escrow account within the time period prescribed in Section 2.3, interest shall accrue at the rate of ten percent (10%) per annum (the legal rate under California law, as set forth in California Civil Code Section 3289) on the unpaid balance from the applicable due date until the date on which such amount is actually deposited in full.
In the event of a material default in payment — defined as the failure to deposit any portion of the Settlement Amount within fifteen (15) business days after written notice from RGC to Defendants specifying the deficiency — RGC shall have the right, at its sole election, to pursue either of the following remedies:
(a) Enforce this Agreement in any court of competent jurisdiction, including through an action for specific performance, and recover all accrued interest, together with reasonable attorneys' fees and costs incurred in connection with such enforcement; or
(b) Set aside this Agreement in its entirety and proceed with the Action as if this Agreement had never been executed, with all of RGC's claims, rights, and defenses fully preserved and reinstated, including the right to seek trial on all claims asserted in the FAC.
The remedies set forth in this Section 2.5 are cumulative and are in addition to, and not in lieu of, any other remedies available to RGC at law or in equity.
Section 2.6 — Taxes.
Each Party shall be solely responsible for its own federal, state, local, and foreign tax obligations, if any, arising from the payment, receipt, or disbursement of the Settlement Amount. Defendants and Ironclad shall not be responsible for any tax obligations of RGC arising from the receipt of the Settlement Amount, and RGC shall indemnify and hold harmless Defendants and Ironclad from and against any and all tax liabilities, penalties, interest, or other amounts assessed against Defendants or Ironclad as a result of RGC's failure to report or pay its tax obligations with respect to the Settlement Amount.
RGC acknowledges that it has been advised to consult with independent tax counsel regarding the federal, state, local, and foreign tax treatment of the Settlement Amount, and that none of the Defendants, Ironclad, or their respective counsel has made or is making any representation or warranty regarding the tax treatment or tax consequences of any payment made or received pursuant to this Agreement. The Escrow Agent shall issue any applicable tax reporting forms (including, without limitation, IRS Form 1099) in accordance with applicable law, and the Parties shall provide the Escrow Agent with any taxpayer identification forms (including, without limitation, IRS Form W-9) reasonably requested by the Escrow Agent.
ARTICLE 3 — CORRECTIVE STATEMENTS
Section 3.1 — Corrective Publication.
Within five (5) business days of the Effective Date (i.e., on or before January 13, 2025), GPR shall publish the Corrective Publication on the website grizzlypeakresearch.com, in the exact form and content set forth in Exhibit A attached hereto. The Corrective Publication shall be not fewer than one thousand five hundred (1,500) words in length and shall be prominently and conspicuously displayed on the homepage of grizzlypeakresearch.com with a clearly labeled hyperlink to the full text of the Corrective Publication.
The Corrective Publication shall also be posted and made accessible at the same uniform resource locator (URL) addresses where Report 1, Report 2, and Report 3 were originally posted, such that any person navigating to the original URLs for the Reports will be directed to the Corrective Publication.
The Corrective Publication shall acknowledge each of the following:
(a) The Reports contained material inaccuracies regarding the business, financial performance, regulatory compliance, and management of RGC;
(b) The allegation contained in Report 1 that RGC fabricated approximately $410 million in fiscal year 2023 revenue through fictitious intercompany transactions was unfounded and not supported by the evidence;
(c) The allegation contained in Report 2 that RGC manipulated its proprietary RNG software to inflate payout statistics reported to the Nevada Gaming Control Board was disproven by the Nevada Gaming Control Board's independent audit, which was completed on March 29, 2024, and which found that RGC's RNG systems were fully compliant with all applicable regulations and that no evidence of manipulation or tampering existed; and
(d) The allegation contained in Report 3 regarding undisclosed related-party dealings between RGC's Chief Executive Officer, Marcus J. Calloway, and Vermilion Holdings LLC was based on incomplete information and was misleading.
The Corrective Publication shall remain continuously posted, accessible, and viewable on grizzlypeakresearch.com for a minimum period of twenty-four (24) months from the date of initial posting (i.e., the Corrective Publication shall remain posted through no earlier than January 13, 2027). During this twenty-four-month period, GPR shall not alter, modify, amend, redact, remove, or take down the Corrective Publication, in whole or in part, without the prior written consent of RGC.
Section 3.2 — Social Media Corrective Statement.
Within five (5) business days of the Effective Date (i.e., on or before January 13, 2025), GPR shall post the Social Media Corrective on the social-media account @GrizzlyPeakRes, in the exact form and content set forth in Exhibit B attached hereto. The Social Media Corrective shall be not fewer than two hundred eighty (280) characters in length and shall include a clearly functional hyperlink to the full text of the Corrective Publication on grizzlypeakresearch.com.
The Social Media Corrective shall be "pinned" or otherwise designated as a featured or prioritized post on the @GrizzlyPeakRes social-media account so that it appears prominently to all visitors to the account's profile page. The Social Media Corrective shall remain posted and accessible for the same twenty-four-month minimum period as the Corrective Publication (i.e., through no earlier than January 13, 2027). During this twenty-four-month period, GPR shall not delete, unpin, archive, obscure, or otherwise diminish the visibility or accessibility of the Social Media Corrective.
Section 3.3 — Mutual Approval of Text.
The exact text of the Corrective Publication and the Social Media Corrective has been mutually reviewed, negotiated, and approved by all Parties and is set forth in Exhibits A and B, respectively. No modification, revision, or amendment to the text of the Corrective Publication or the Social Media Corrective shall be made without the prior written consent of both RGC and GPR. Any dispute regarding the content or form of the Corrective Publication or Social Media Corrective shall be resolved by submission to Hon. Gerald K. Matsuda (Ret.) for binding determination, with costs of such proceeding to be borne equally by the disputing Parties.
Section 3.4 — Compliance Monitoring.
RGC shall have the right, at any time and from time to time during the twenty-four-month posting period described in Sections 3.1 and 3.2, to verify the continued posting, accessibility, visibility, and unaltered status of the Corrective Publication and the Social Media Corrective. RGC may accomplish such verification through any reasonable means, including direct inspection of the relevant websites and social-media platforms, the use of web-archiving services, or through its designated representatives or agents.
In the event that RGC determines, in good faith, that GPR has failed to maintain the postings of the Corrective Publication or the Social Media Corrective in compliance with this Article 3, whether by removal, alteration, technical malfunction, or otherwise, RGC shall provide written notice to GPR specifying the nature of the non-compliance. GPR shall have five (5) business days from receipt of such notice to cure the non-compliance and restore the Corrective Publication and/or Social Media Corrective to full compliance with the requirements of this Article 3. Failure to cure within such five-business-day period shall constitute a material breach of this Agreement and shall entitle RGC to seek all available remedies, including injunctive relief, specific performance, and damages.
ARTICLE 4 — INJUNCTIVE RELIEF
Section 4.1 — Stipulated Permanent Injunction — Republication.
Defendants consent to the entry by the Court of a permanent injunction in the form attached hereto as Exhibit D, which shall permanently enjoin and restrain each of the Defendants, and each of their respective officers, directors, members, partners, managers, employees, agents, representatives, successors, assigns, and all persons acting in concert or participation with any of them, from engaging in any of the following conduct:
(a) Republishing, reposting, redistributing, or otherwise disseminating the Reports, or any portion or excerpt thereof, in any medium or format, whether in print, electronic, digital, or any other form, including but not limited to on websites, social-media platforms, email distributions, investor presentations, research databases, or any other channel of communication; and
(b) Publishing, disseminating, broadcasting, or causing to be published, disseminated, or broadcast any Substantially Similar Statements about RGC, or about any of RGC's officers, directors, employees, affiliates, or subsidiaries, in any medium or format.
The permanent injunction described in this Section 4.1 shall be of unlimited duration and shall survive the expiration or termination of any other provision of this Agreement that is subject to a specified term.
Section 4.2 — Stipulated Permanent Injunction — Securities Trading Bar.
Defendants further consent to the entry by the Court of a permanent injunction in the form attached hereto as Exhibit D, which shall permanently enjoin and restrain each of the following persons and entities from trading, directly or indirectly, in RDGM Securities for a period of five (5) years from the Effective Date (i.e., through and including January 6, 2030):
(a) GPR;
(b) GPCP;
(c) Grizzly Peak Capital GP LLC;
(d) Tobias Fenchurch; and
(e) Any entity, fund, account, or investment vehicle that is directly or indirectly controlled by, managed by, or under common control with Fenchurch.
For purposes of this Section 4.2, "trading" means any purchase, sale, short sale, pledge, hypothecation, entry into a swap or other derivative transaction, or any other transaction that results in or is intended to result in the acquisition or disposition of, or the establishment of a long or short economic position in, RDGM Securities, whether effected through a broker, dealer, exchange, over-the-counter market, private transaction, or otherwise. The prohibition shall apply regardless of whether the transaction is conducted in the name of the enjoined person or entity, through a nominee, agent, or intermediary, or through any other arrangement designed to circumvent this restriction.
Section 4.3 — Filing of Stipulated Injunction.
Within ten (10) business days of the Effective Date (i.e., on or before January 21, 2025), counsel for the Parties shall jointly submit the Stipulated Injunction in the form attached hereto as Exhibit D to the Court for review and entry by the Honorable Patricia Yamamoto. The Parties shall cooperate fully and in good faith to obtain the Court's entry of the Stipulated Injunction as promptly as practicable, including by appearing at any hearing the Court may require. In the event the Court requests any modifications to the form of the Stipulated Injunction, the Parties shall negotiate in good faith regarding such modifications, provided that no Party shall be required to agree to any modification that materially alters the scope, duration, or substance of the injunctive relief described in Sections 4.1 and 4.2.
Section 4.4 — Removal of Reports.
Within five (5) business days of the Effective Date (i.e., on or before January 13, 2025), GPR shall permanently remove from grizzlypeakresearch.com the full text and all associated materials (including charts, graphs, appendices, and supporting documents) of Report 1, Report 2, and Report 3. Following such removal, GPR shall make commercially reasonable efforts to remove or de-index cached copies of the Reports from third-party platforms, search engines, content aggregators, and web archives, including but not limited to Severin Industries, Ashgrove Industries, the Wayback Machine (Internet Archive), Seeking Alpha, and any other platform on which the Reports may have been reposted, cached, or archived. GPR shall provide RGC with a written certification of its compliance with this Section 4.4 within fifteen (15) business days of the Effective Date, including a description of the specific actions taken to remove or de-index the Reports from third-party platforms.
ARTICLE 5 — MUTUAL RELEASES
Section 5.1 — Release by RGC.
Effective upon confirmation by the Escrow Agent that the full Settlement Amount of $14,750,000.00 has been deposited into the escrow account established pursuant to the Escrow Agreement, RGC, on behalf of itself and each of its past, present, and future officers, directors, employees, agents, representatives, successors, assigns, affiliates, subsidiaries (including, without limitation, Redstone Digital and Crimson Studios), parent entities, and all persons and entities acting on its behalf or claiming through it (collectively, the "RGC Releasors"), hereby irrevocably and unconditionally releases, acquits, and forever discharges each of the Defendants and their respective past, present, and future officers, directors, members, partners, managers, employees, agents, representatives, heirs, executors, administrators, successors, assigns, insurers (including, without limitation, Ironclad Surety & Insurance Co.), and affiliates (collectively, the "Defendant Releasees") from any and all claims, counterclaims, cross-claims, demands, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, liabilities, losses, costs, expenses, attorneys' fees, and any and all obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, contingent or non-contingent, that any RGC Releasor now has, has ever had, or may hereafter have against any Defendant Releasee, arising out of, relating to, or in any way connected with the Reports, the Action, the subject matter of the Action, or any of the facts, events, transactions, occurrences, acts, omissions, representations, statements, or publications alleged, described, or referenced in the Action or the Reports (collectively, the "Released Claims").
Section 5.2 — Release by Defendants.
Effective upon the Effective Date, each of the Defendants, on behalf of himself or itself and each of his or its respective past, present, and future officers, directors, members, partners, managers, employees, agents, representatives, heirs, executors, administrators, successors, assigns, and affiliates (collectively, the "Defendant Releasors"), hereby irrevocably and unconditionally releases, acquits, and forever discharges RGC and each of its past, present, and future officers, directors, employees, agents, representatives, successors, assigns, affiliates, subsidiaries (including, without limitation, Redstone Digital and Crimson Studios), parent entities, and insurers (including, without limitation, Atlas National Insurance Group) (collectively, the "RGC Releasees") from any and all claims, counterclaims, cross-claims, demands, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, liabilities, losses, costs, expenses, attorneys' fees, and any and all obligations of every kind and nature whatsoever, whether at law or in equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, contingent or non-contingent, that any Defendant Releasor now has, has ever had, or may hereafter have against any RGC Releasee, arising out of, relating to, or in any way connected with the Reports, the Action, the subject matter of the Action, or any of the facts, events, transactions, occurrences, acts, omissions, representations, statements, or publications alleged, described, or referenced in the Action or the Reports.
Section 5.3 — Waiver of Unknown Claims (Cal. Civ. Code § 1542).
Each Party, on behalf of itself and its respective Releasors (as applicable), expressly waives and relinquishes, to the fullest extent permitted by law, all rights and benefits afforded by Section 1542 of the California Civil Code, which provides as follows:
"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."
Each Party acknowledges that it is aware of and understands the significance and consequences of this specific waiver of California Civil Code Section 1542. Each Party acknowledges that it may discover claims or facts in addition to or different from those that it now knows or believes to exist with respect to the subject matter of the releases granted in Sections 5.1 and 5.2, and each Party agrees that this Agreement, including the releases granted herein, shall remain in full force and effect in all respects notwithstanding the discovery or existence of any such additional or different claims or facts. Each Party has been advised by its counsel regarding the meaning and effect of this waiver and has elected to waive the protections of California Civil Code Section 1542 voluntarily and with full knowledge and understanding of its consequences.
Section 5.4 — Carve-Outs from Release.
Notwithstanding the breadth of the releases set forth in Sections 5.1 and 5.2, nothing in this Article 5 shall operate to release, waive, or discharge any of the following:
(a) Any obligations of the Parties arising under or created by this Agreement, including, without limitation, the payment obligations set forth in Article 2, the corrective-statement obligations set forth in Article 3, the injunctive-relief provisions set forth in Article 4, the non-disparagement obligations set forth in Article 7, and the confidentiality obligations set forth in Article 8;
(b) Any claims or rights of any Party to enforce the terms and conditions of this Agreement in any court of competent jurisdiction, including claims for breach of this Agreement, claims for specific performance, and claims for injunctive or declaratory relief;
(c) Any obligations of the Parties or the Escrow Agent arising under the Escrow Agreement; and
(d) Any obligations of Ironclad Surety & Insurance Co. under directors-and-officers / media-liability Policy No. ML-2023-07714 to fund the Insurance Contribution as described in Section 2.2(a) of this Agreement.
ARTICLE 6 — DISMISSAL OF THE ACTION
Section 6.1 — Stipulated Dismissal with Prejudice.
Within ten (10) business days of the Effective Date (i.e., on or before January 21, 2025), but in no event later than February 19, 2025, counsel for the Parties shall jointly file with the Court the Stipulation and [Proposed] Order for Dismissal with Prejudice in the form attached hereto as Exhibit C. The Stipulated Dismissal shall provide for the dismissal of the Action in its entirety, including all claims and causes of action asserted in the First Amended Complaint (trade libel, intentional interference with prospective economic advantage, unfair business practices, and negligent misrepresentation), with prejudice as to all Parties, and with each Party to bear its own attorneys' fees and costs.
Section 6.2 — Retention of Jurisdiction.
The Stipulated Dismissal shall expressly provide that the Court shall retain jurisdiction over the Parties and the subject matter of this Agreement for purposes of enforcing the terms and conditions of this Agreement, including the payment obligations, corrective-statement obligations, injunctive-relief provisions, and all other obligations set forth herein, pursuant to California Code of Civil Procedure Section 664.6. The Parties consent to the Court's retention of such jurisdiction and agree that any motion to enforce this Agreement may be brought by any Party in the Action, Case No. 24STCV-01892, before the Honorable Patricia Yamamoto or any successor judge assigned to the matter.
Section 6.3 — Attorneys' Fees and Costs.
Each Party shall bear its own attorneys' fees, costs, and expenses incurred in connection with the Action, including all costs of litigation, discovery, depositions, expert witnesses, mediation, and the negotiation, preparation, execution, and implementation of this Agreement. Nothing in this Section 6.3 shall affect the right of a prevailing Party to recover attorneys' fees and costs incurred in connection with an action to enforce this Agreement, as provided in Section 11.13.
ARTICLE 7 — NON-DISPARAGEMENT
Section 7.1 — Mutual Non-Disparagement Covenant.
For a period of three (3) years from the Effective Date (i.e., through and including January 6, 2028), no Party shall, directly or indirectly, whether by itself or through any officer, director, member, partner, manager, employee, agent, representative, or affiliate, make, publish, issue, or cause to be made, published, or issued any disparaging, defamatory, derogatory, or negative statements about any other Party, or about any other Party's officers, directors, members, partners, employees, agents, or affiliates. This prohibition applies to statements in any medium or format, whether oral, written, electronic, or otherwise, including but not limited to statements made on social-media platforms, in press releases, in investor communications, in interviews, in research reports, in podcasts, in blog posts, in video content, or in any other public or private forum.
For purposes of this Section 7.1, a "disparaging" statement means any statement that would tend to damage the reputation, goodwill, or business standing of the person or entity about whom the statement is made, whether or not the statement is true or factually accurate.
Section 7.2 — Permitted Communications.
Notwithstanding the restrictions set forth in Section 7.1, nothing in this Article 7 shall prohibit or restrict any of the following communications:
(a) Truthful testimony or statements compelled by lawful legal process, including but not limited to subpoena, court order, deposition, or testimony at trial or in any administrative proceeding;
(b) Truthful statements required by applicable law, regulation, rule, or order of any governmental authority, regulatory body, or self-regulatory organization, including statements made in response to inquiries from the SEC, the Nevada Gaming Control Board, the New Jersey Division of Gaming Enforcement, the Mississippi Gaming Commission, or any other gaming or securities regulatory authority;
(c) Confidential communications with a Party's legal counsel, accountants, auditors, or tax advisors in connection with such Party's compliance with this Agreement, the defense or prosecution of any legal proceeding, or the provision of professional services; and
(d) Factual statements by RGC to its investors, shareholders, analysts, regulators, auditors, or lenders regarding the settlement of the Action, to the extent such statements are not prohibited by the confidentiality provisions of Article 8 and are consistent with RGC's obligations as a publicly traded company under applicable securities laws and regulations.
ARTICLE 8 — CONFIDENTIALITY
Section 8.1 — Confidential Terms.
The Parties agree that the following information shall be treated as confidential and shall not be disclosed by any Party to any third party, except as expressly provided in Section 8.2 (collectively, the "Confidential Terms"):
(a) The specific dollar amount of the Settlement Amount ($14,750,000.00);
(b) The allocation of the Settlement Amount between the Insurance Contribution ($10,250,000.00) and the Direct Contribution ($4,500,000.00);
(c) The specific financial details of Defendants' contribution to the Settlement Amount, including the sources and amounts of funding, the identity of Defendants' insurer and the terms of coverage, and any other financial or economic terms of the settlement that are not otherwise publicly disclosed through court filings; and
(d) The terms and conditions of the Escrow Agreement, other than those terms that are necessarily incorporated in or referenced by the publicly filed Stipulated Dismissal or Stipulated Injunction.
Section 8.2 — Exceptions to Confidentiality.
The confidentiality obligations set forth in Section 8.1 shall not apply to, and shall not restrict the disclosure of, the following:
(a) The existence of the settlement and the fact that the Action has been resolved and is being dismissed with prejudice, which the Parties may freely disclose;
(b) The Corrective Publication and the Social Media Corrective, which are intended for public dissemination and shall be posted as described in Article 3 of this Agreement;
(c) The Stipulated Dismissal and the Stipulated Injunction, which are public court filings and part of the public record of the Action;
(d) Disclosures required by applicable law, rule, regulation, court order, subpoena, or other lawful process, including but not limited to disclosures required by RGC's obligations as a publicly traded company under the rules and regulations of the SEC, the Nasdaq Stock Market, and any other applicable securities exchange or regulatory authority; provided, however, that to the extent practicable and legally permissible, the disclosing Party shall provide reasonable advance notice to the other Parties prior to making any such legally compelled disclosure and shall cooperate in good faith with any request by the other Parties to seek a protective order or other confidential treatment of the Confidential Terms;
(e) Disclosures by a Party to its legal counsel, auditors, tax advisors, financial advisors, or insurers, on a need-to-know basis and solely for the purpose of obtaining professional advice or services, provided that such recipients are informed of the confidential nature of the Confidential Terms and agree (or are otherwise obligated) to maintain the confidentiality thereof; and
(f) Disclosures by RGC to the following specific third parties, to the extent reasonably necessary in connection with RGC's business operations, financial reporting, insurance matters, or communications strategy: (i) Pinnacle Audit & Advisory LLP, RGC's independent auditor; (ii) Atlas National Insurance Group, RGC's directors-and-officers liability insurer; and (iii) Crestline Equity Partners Group Inc., RGC's crisis-communications and public-relations advisor.
Section 8.3 — Public Statements.
The Parties shall coordinate in good faith regarding any public announcements, press releases, or public statements relating to the settlement of the Action, other than the Corrective Publication and Social Media Corrective (which are governed by Article 3) and the Stipulated Dismissal and Stipulated Injunction (which are public court filings). No Party shall issue any press release, post any public statement, or make any filing with any governmental authority or regulatory body that discloses any Confidential Terms without the prior written consent of the other Parties, except to the extent such disclosure is required by applicable law, rule, or regulation, in which case the provisions of Section 8.2(d) shall govern.
ARTICLE 9 — REPRESENTATIONS AND WARRANTIES
Section 9.1 — Mutual Representations and Warranties.
Each Party to this Agreement hereby represents and warrants to each other Party as follows:
(a) Such Party has full power, authority, and legal capacity to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby, and no further approval, authorization, consent, or action by any person, entity, court, or governmental authority is required in connection therewith;
(b) This Agreement has been duly authorized, executed, and delivered by such Party (and, in the case of an entity, by a duly authorized representative of such entity) and constitutes the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity;
(c) The execution, delivery, and performance of this Agreement by such Party does not and will not conflict with, result in a breach of, or constitute a default under any other agreement, instrument, order, judgment, decree, law, or regulation to which such Party is a party or by which such Party is bound; and
(d) Such Party has been represented by competent legal counsel of its own choosing throughout the negotiation and execution of this Agreement and has had the opportunity to consult with such counsel regarding all aspects of this Agreement, including the mutual releases set forth in Article 5 and the waiver of California Civil Code Section 1542 set forth in Section 5.3.
Section 9.2 — Representations and Warranties by GPR and GPCP.
Each of GPR and GPCP hereby represents and warrants to RGC as follows:
(a) GPR is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to transact business in each jurisdiction where the nature of its activities requires such qualification;
(b) GPCP is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to transact business in each jurisdiction where the nature of its activities requires such qualification;
(c) Tobias Fenchurch, in his capacity as Managing Member of GPR and as sole managing member of Grizzly Peak Capital GP LLC (the general partner of GPCP), has full authority to execute this Agreement on behalf of GPR and GPCP and to bind each of GPR and GPCP to the terms and conditions set forth herein, and no other consent, approval, or authorization is required from any other member, partner, or stakeholder of GPR or GPCP; and
(d) GPR and GPCP, jointly and severally, have the financial capacity to fund the Direct Contribution of Four Million Five Hundred Thousand Dollars ($4,500,000.00) within the time period prescribed in Section 2.3, and neither GPR nor GPCP is currently subject to any bankruptcy proceeding, insolvency proceeding, receivership, assignment for the benefit of creditors, or other similar proceeding that would impair its ability to satisfy its payment obligations hereunder.
Section 9.3 — Representations and Warranties by Fenchurch.
Tobias Fenchurch hereby represents and warrants to RGC as follows:
(a) He is executing this Agreement in his individual capacity and in his capacity as Managing Member of GPR and sole managing member of Grizzly Peak Capital GP LLC (the general partner of GPCP);
(b) He has the legal capacity and authority to execute this Agreement and to bind himself individually and in his representative capacities to the terms and conditions set forth herein; and
(c) He has read this Agreement in its entirety, understands its terms and conditions, and enters into this Agreement voluntarily and of his own free will, after having had the opportunity to consult with his legal counsel, Raymond Caldwell of Caldwell, Tseng & Barrow LLP.
Section 9.4 — Representations and Warranties by RGC.
RGC hereby represents and warrants to Defendants as follows:
(a) RGC is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and its common stock is listed and traded on the Nasdaq Global Select Market under the ticker symbol "RDGM";
(b) Derek Olafson, General Counsel of RGC, is duly authorized by the Board of Directors of RGC to execute this Agreement on behalf of RGC and to bind RGC to the terms and conditions set forth herein, and all necessary corporate approvals and authorizations have been obtained; and
(c) RGC has not assigned, transferred, pledged, hypothecated, or otherwise conveyed any of the Released Claims or any interest therein to any third party, and no other person or entity holds any interest in the Released Claims.
Section 9.5 — No Admission of Liability.
This Agreement and all of its terms, provisions, and conditions are the result of a compromise and settlement of disputed claims between the Parties. Nothing contained in this Agreement, nor any action taken pursuant to or in furtherance of this Agreement, shall be construed as, or deemed to be, or shall constitute an admission of liability, fault, wrongdoing, or the truth or validity of any claim, allegation, or defense by any Party. Each of the Defendants expressly denies all allegations of wrongdoing, liability, and fault asserted against them in the Action, including all claims asserted in the First Amended Complaint. RGC expressly denies that the Reports contained accurate or truthful statements. The Parties enter into this Agreement solely for the purpose of avoiding the burden, expense, risk, and uncertainty of continued litigation.
ARTICLE 10 — INSURANCE MATTERS