Contract analysis

I. Purpose and Executive Summary This memorandum analyzes the individual criminal exposure of Gavin Holt, former Vice President of U.S. Specialty Minerals Sales at Torchlight Mining Corp. ("TMC" or the "Company"), in connection with the ongoing grand jury investigation being conducted by the Antitrust Division of the United States Department of Justice ("DOJ"), designated Grand Jury Investigation No. GJ-22-0194, befo

II. Background A. The Investigation The grand jury investigation at the center of this memorandum was formally opened on February 10, 2022, and is designated Grand Jury No. GJ-22-0194 before the United States District Court for the Northern District of California, San Francisco Division. The investigation is being led by Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves of the DOJ Antitrust Divis

III. Analysis of Holt's Individual Criminal Exposure A. Applicable Legal Framework The alleged conduct at issue in Grand Jury Investigation No. GJ-22-0194—price-fixing, market allocation, and bid-rigging—constitutes per se violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Unlike antitrust claims analyzed under the rule of reason, per se violations do not require the government to demonstrate antico

IV. Implications for TMC's Defense Strategy A. Divergence of Interests Between TMC and Holt The developments described in Sections II and III above have produced a material and irreconcilable divergence between TMC's interests and Holt's interests. This divergence is not merely theoretical; it has concrete, practical implications for virtually every aspect of TMC's defense strategy going forward. TMC's strategic inte

V. D&O Insurance Considerations Related to Holt TMC tendered notice of the grand jury investigation to Northland Mutual Insurance Co. on March 4, 2022, under Directors & Officers Liability Policy No. NMI-DO-2021-5547. The policy period runs from July 1, 2021 through July 1, 2022, and is renewed annually. The policy provides an aggregate limit of USD 50 million, subject to a retention (self-insured deductible) of USD

VI. Recommendations Based on the foregoing analysis, this memorandum makes the following recommendations:

1. Do not enter into a joint defense agreement with Holt or his counsel. Calderwood & Harkness should not enter into a joint defense agreement with Briarcliff Law Group PLLC or Patrick Dunleavy on behalf of Gavin Holt. The divergence of interests between TMC and Holt is too great, and a JDA would compromise TMC's cooperation strategy, create privilege complications, and be viewed negatively by DOJ. Any request from B

2. Limit communications with Briarcliff to logistical matters only. All substantive communications should be avoided. Communications should be restricted to document production, scheduling, and similar procedural topics. All communications with Briarcliff should be routed through Elaine Forsythe and documented in the case file prior to transmission.

3. Proceed with the internal investigation without Holt's participation. Holt's refusal to cooperate with the internal investigation should be documented in the investigation record. The investigation should proceed on the basis of the substantial evidentiary record already developed, including the VaultChat messages, witness interviews, and pricing data. TMC should be prepared to disclose Holt's refusal to cooperate

4. Prepare TMC for the Holt carve-out in any future NPA. Calderwood & Harkness should brief CEO Søren Dalmqvist and General Counsel Priya Anand on the practical certainty that DOJ will insist on reserving the right to prosecute Holt individually as a condition of any non-prosecution agreement with TMC. TMC's leadership should understand and accept this outcome as part of the entity's cooperation strategy.

5. Ensure the NPA carve-out language is narrowly drafted. The carve-out should identify Holt by name as the individual excluded from the NPA's protections and should not inadvertently expose other current or former TMC employees who were not involved in the alleged conduct. Calderwood & Harkness should prepare proposed NPA language that confirms the protection of current TMC employees—including Sandra Chu and Thomas

6. Advise Sandra Chu and Thomas Eriksen of their right to retain personal counsel. Both Chu and Eriksen should be informed, in a documented communication, of their right to retain personal criminal defense counsel at their own expense or, to the extent available, through TMC's indemnification provisions. Calderwood & Harkness should continue to represent their interests as TMC employees to the extent there is no conf

7. Continue to develop evidence supporting the narrative that Holt acted without C-suite or Board authorization. This narrative is central to TMC's mitigation case and to the ar