CALDERWOOD & HARKNESS LLP 3960 Howard Hughes Parkway, Suite 1400 Las Vegas, Nevada 89169

CALDERWOOD & HARKNESS LLP 3960 Howard Hughes Parkway, Suite 1400 Las Vegas, Nevada 89169
INTERNAL MEMORANDUM
TO: Douglas Fairchild, Engagement Partner Angela Fontaine, Billing Partner
FROM: Marcus Leung, Associate
DATE: November 16, 2022
RE: Notice of Circumstances — D&O Insurance — Redstone Gaming Corp. / Pinnacle Harbor Capital Partners Activist Campaign
MATTER NO.: 1033-00003
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP attorneys assigned to this matter and for communication to the client, Redstone Gaming Corp., at the direction of the Engagement Partner. Do not distribute, copy, or disclose without authorization.
I. Purpose
This memorandum documents the preparation, submission, and delivery of a formal notice of circumstances to the directors and officers liability insurance carriers of Redstone Gaming Corp. ("RGC" or the "Company") in connection with the activist board-seat campaign initiated by Pinnacle Harbor Capital Partners, LP ("Pinnacle Harbor"). The notice was submitted to the Company's primary D&O liability carrier, Northbridge Indemnity Company, and its first excess carrier, Creston National Insurance Co., through the Company's insurance broker, Glenmore Caulfield Insurance Brokers, Inc.
The notice was submitted on November 16, 2022 — the day following the formal opening of the Calderwood & Harkness engagement on November 15, 2022, and two days after the RGC Board of Directors convened an emergency meeting on November 14, 2022 to address Pinnacle Harbor's activist demands. The decision to submit the notice promptly reflects the time-sensitive nature of the circumstances and the importance of preserving coverage under the current policy period, which expires on January 1, 2023.
The notice of circumstances is a precautionary measure designed to preserve coverage for potential claims, defense costs, and related expenses that may arise from the activist campaign. The scope of potential exposure includes, but is not limited to, proxy contest defense costs, potential litigation (including actions brought under the Delaware General Corporation Law, federal securities laws, and fiduciary duty claims), regulatory inquiries by the U.S. Securities and Exchange Commission ("SEC") or state gaming regulatory bodies, and any other proceedings or demands that may be directed at RGC's directors, officers, or the Company itself in connection with the circumstances described herein.
At this time, no lawsuit, formal demand for monetary relief, regulatory proceeding, or other formal claim has been asserted against any director, officer, or the Company. The notice is submitted as a "notice of circumstances" or "notice of potential claim" under the applicable policy provisions, rather than as a formal claim notice, in order to link any future claims arising from these circumstances to the current 2022 policy year.
II. Background — The Activist Campaign
A. Pinnacle Harbor's Stake Accumulation
Pinnacle Harbor Capital Partners, LP is a Delaware limited partnership whose general partner is Pinnacle Harbor Capital Management, LLC. Pinnacle Harbor operates as an event-driven and activist hedge fund with approximately $4.2 billion in assets under management. The fund is headquartered at 590 Madison Avenue, 34th Floor, New York, New York 10022. The Managing Partner and Chief Investment Officer of Pinnacle Harbor is Viktor S. Kessler. The Head of Activism and Portfolio Manager responsible for the RGC campaign is Nadia Johar.
Between approximately June 2022 and November 2022, Pinnacle Harbor accumulated an aggregate position of 7,119,600 shares of RGC common stock, representing approximately 6.8% of the Company's 104,700,000 shares of common stock outstanding. The shares were acquired through open-market purchases at a weighted-average purchase price of approximately $26.42 per share, resulting in a total cost basis of approximately $188.1 million.
As of the opening of the Calderwood & Harkness engagement on November 15, 2022, RGC common stock was trading at approximately $30.00 per share. At that price, Pinnacle Harbor's position had a mark-to-market value of approximately $213.6 million, reflecting an unrealized gain of approximately $25.5 million, or approximately 13.5% on the total cost basis. The size and rapid accumulation of this position are consistent with Pinnacle Harbor's established pattern of building significant stakes in target companies prior to launching public activist campaigns, and the magnitude of the position — nearly $214 million at current market values — underscores the seriousness of the fund's intentions and the likelihood that Pinnacle Harbor will pursue its demands aggressively.
B. Key Events Leading to Notice
The following is a chronological summary of the key events precipitating the submission of the notice of circumstances:
October 28, 2022 — Private Demand Letter. Pinnacle Harbor sent a private letter (the "Demand Letter") to RGC Board Chair Diane K. Sheridan. The Demand Letter set forth three principal demands: (1) the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors; (2) the initiation of a formal strategic review of the Company's interactive gaming division, which generated revenue of approximately $412 million in fiscal year 2021, including a specific request that the Board evaluate a potential sale, spin-off, or other separation of the division; and (3) the return of $300 million to shareholders through either a special dividend or an accelerated share repurchase program. The tone of the Demand Letter was assertive and indicated that Pinnacle Harbor was prepared to take public action, including a proxy contest, if the Board did not engage constructively with its proposals within a specified timeframe.
November 10, 2022 — Preliminary Schedule 13D Filing. Pinnacle Harbor filed a preliminary Schedule 13D with the SEC, publicly disclosing its 6.8% ownership stake in RGC common stock and its activist intentions. The Schedule 13D filing made the activist campaign a matter of public record and triggered media coverage and investor scrutiny. The filing included descriptions of Pinnacle Harbor's demands and signaled the fund's willingness to pursue a contested election at the Company's 2023 Annual Meeting of Stockholders if its demands were not addressed.
November 14, 2022 — Emergency Board Meeting. The RGC Board of Directors held an emergency meeting to discuss and respond to the Pinnacle Harbor campaign. At this meeting, the Board resolved to: (a) engage outside counsel, selecting Calderwood & Harkness LLP, to advise the Board on its legal obligations, defensive strategies, and potential responses to the activist demands; (b) engage financial and proxy advisors to assist the Company in evaluating Pinnacle Harbor's proposals and preparing for a potential proxy contest; and (c) form a Special Committee of independent directors to oversee the Company's response to the activist campaign. The Special Committee was constituted as follows: Jim Delacroix (Chair), Carmen Vasquez, and Randall Morse. Each member of the Special Committee is an independent, non-management director of the Company.
November 15, 2022 — Calderwood & Harkness Engagement Opened. The Calderwood & Harkness engagement was formally opened on November 15, 2022. The engagement letter was executed between Redstone Gaming Corp. and Calderwood & Harkness LLP on the same date. Douglas Fairchild was designated as the Engagement Partner and Angela Fontaine as the Billing Partner. Marcus Leung was assigned as the lead associate on the matter.
Pinnacle Harbor has identified two nominees for election to the RGC Board of Directors at the 2023 Annual Meeting. The nominees are: (1) Dr. Sandra Trevelyan, age 55, former Chief Operating Officer of Meridian Interactive Holdings, Inc., a publicly traded interactive entertainment company; and (2) Hugh Desmond Grayson, age 61, former Chief Financial Officer of Atlas Leisure Group, Inc., a diversified hospitality and leisure company. Both nominees have significant industry experience and public-company board credentials, which suggests that Pinnacle Harbor's board candidacies are designed to be credible with institutional shareholders and proxy advisory firms.
C. Pinnacle Harbor's Legal Counsel
Pinnacle Harbor has retained the law firm of Hargrove Sloane & Birch LLP as its legal counsel in connection with the activist campaign. Hargrove Sloane & Birch is located at 1585 Broadway, 40th Floor, New York, New York 10036. The lead partner on the Pinnacle Harbor engagement is Jonathan "Jon" Birch III. Hargrove Sloane & Birch is a nationally recognized litigation and activist defense firm with a substantial track record of representing activist investors in contested proxy solicitations and related proceedings. The involvement of this firm confirms the seriousness of Pinnacle Harbor's campaign and increases the likelihood of formal litigation or other adversarial proceedings.
III. D&O Insurance Program — Policy Summary
Set forth below is a summary of the relevant layers of RGC's directors and officers liability insurance program for the current policy year. The program is structured as a primary layer with one excess layer, forming a total D&O insurance tower of $25,000,000. The insurance program was placed and is administered through the Company's insurance broker, Glenmore Caulfield Insurance Brokers, Inc.
A. Primary Layer — Northbridge Indemnity Company
The Northbridge Indemnity primary policy provides the foundational layer of coverage. Side A covers losses sustained by individual directors and officers where the Company is unable or unwilling to indemnify them — for example, in derivative actions or in circumstances of corporate insolvency. Side B reimburses the Company when it indemnifies its directors and officers for covered claims. Side C provides entity-level coverage for securities claims brought against the Company itself. The $500,000 self-insured retention applies to Side B and Side C claims; Side A claims are typically not subject to the retention.
B. First Excess Layer — Creston National Insurance Co.
The Creston National first excess policy is a follow-form policy that incorporates the terms, conditions, definitions, and exclusions of the Northbridge Indemnity primary policy, except as otherwise modified in the Creston National policy itself. The excess layer attaches only upon the complete exhaustion of the $15,000,000 aggregate limit under the primary policy, at which point Creston National provides an additional $10,000,000 of coverage for a combined tower of $25,000,000.
C. Insurance Broker
The RGC D&O insurance program was placed by and is administered through Glenmore Caulfield Insurance Brokers, Inc. The primary contact at Glenmore Caulfield is Sarah Voss, Senior Vice President. Ms. Voss serves as the placement broker for the RGC D&O tower and acts as the intermediary for all notice submissions, carrier communications, and coverage inquiries. All notices of circumstances, claim notices, and supplemental reports are to be transmitted through Ms. Voss in the first instance, consistent with the standard brokerage arrangement.
IV. Notice of Circumstances — Content and Delivery
A. Form of Notice
A formal written notice of circumstances was prepared by Marcus Leung at Calderwood & Harkness LLP, in consultation with Douglas Fairchild and Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of Redstone Gaming Corp. The notice was submitted to both Northbridge Indemnity Company and Creston National Insurance Co. through the insurance broker, Glenmore Caulfield Insurance Brokers, Inc. (attention: Sarah Voss, Senior Vice President), on November 16, 2022.
The notice was submitted under the "notice of circumstances" or "notice of potential claim" provisions of the respective policies, rather than as a formal claim notice. This approach was selected because, as of the date of submission, no lawsuit, regulatory proceeding, or demand for monetary relief has been asserted against any director, officer, or the Company in connection with the Pinnacle Harbor activist campaign. The notice of circumstances mechanism is designed to allow an insured to report facts, circumstances, or situations that may reasonably be expected to give rise to a claim, thereby "locking in" those circumstances to the current policy period. If a claim subsequently arises from the reported circumstances, the claim will be treated as having been made during the current policy period — even if the actual claim is not formally asserted until after the policy has expired or been renewed.
The notice is designed to preserve coverage under the current policy period, which expires on January 1, 2023, for any claim that may subsequently arise out of the reported circumstances. Given the trajectory of the Pinnacle Harbor campaign and the realistic possibility that a proxy contest, litigation, or regulatory inquiry could commence in early 2023 — after the current policy period has lapsed — timely submission of this notice is essential to maintaining the link between the reported circumstances and the 2022 policy year.
A copy of the notice of circumstances letter, as submitted, is appended hereto as Attachment A.
B. Circumstances Reported
The notice of circumstances describes the following facts and circumstances:
1.  Stake Accumulation and Schedule 13D Filing. The accumulation by Pinnacle Harbor Capital Partners, LP of approximately 7,119,600 shares of RGC common stock, representing a 6.8% ownership stake, and the filing of a preliminary Schedule 13D with the SEC on November 10, 2022, publicly disclosing the activist fund's position and activist intentions.
2.  Private Demand Letter. Pinnacle Harbor's October 28, 2022 private Demand Letter to Board Chair Diane K. Sheridan, in which Pinnacle Harbor demanded the appointment of two Pinnacle Harbor-designated nominees to the RGC Board of Directors, a formal strategic review of the interactive gaming division (including potential sale or spin-off), and a $300 million capital return to shareholders through a special dividend or accelerated share repurchase program.
3.  Potential Proxy Contest. The potential for a contested proxy solicitation at the 2023 RGC Annual Meeting of Stockholders, in which Pinnacle Harbor may nominate its two candidates — Dr. Sandra Trevelyan and Hugh Desmond Grayson — for election to the Board in opposition to the Company's incumbent nominees.
4.  Potential Related Litigation. The potential for related litigation, including but not limited to: (a) actions under the Delaware General Corporation Law challenging Board actions, defensive measures, or corporate governance decisions taken in response to the activist campaign; (b) federal securities law claims, including claims under Sections 14(a) and 14(e) of the Securities Exchange Act of 1934, as amended, relating to proxy solicitation materials, disclosures, or alleged misstatements or omissions; (c) breach of fiduciary duty claims against individual directors and officers; and (d) claims relating to proxy solicitation materials, including both preliminary and definitive proxy statements.
5.  Potential Regulatory Inquiries. The potential for regulatory inquiries or investigations related to SEC filings, proxy solicitation compliance, and gaming regulatory matters. RGC operates in a highly regulated industry, and actions taken by the Board in response to the activist campaign — or the introduction of new board members with activist ties — could trigger scrutiny by state gaming regulatory authorities in jurisdictions where the Company holds gaming licenses.
C. Identified Insured Persons at Risk
The notice identifies the following individuals as insured persons potentially at risk of claims arising from the reported circumstances:
Current Members of the Board of Directors:
•  Diane K. Sheridan — Chair of the Board
•  Gerald R. Whitmore — Chief Executive Officer and Director
•  Raymond Choi — Chief Financial Officer and Director
•  Dr. Miriam Kaplan — Independent Director
•  Theodore "Ted" Barlowe — Independent Director
•  Lorraine Fujikawa — Independent Director
•  James "Jim" Delacroix — Independent Director, Chair of the Special Committee
•  Carmen Vasquez — Independent Director, Member of the Special Committee
•  Randall Morse — Independent Director, Member of the Special Committee
Officers:
•  Patricia "Trish" Nakamura — General Counsel and Corporate Secretary
•  Other officers of the Company as may be covered under the policy definitions of "insured person" or "insured"
The notice was drafted broadly to encompass all directors and officers who may be targets of claims, consistent with the policy's coverage for all insured persons as defined therein. As the activist campaign progresses, additional officers or former directors may be identified as potentially at risk, and supplemental notices may be warranted.
D. Method of Delivery
The notice of circumstances was transmitted on November 16, 2022 by the following methods:
1.  Email Transmission. Sarah Voss of Glenmore Caulfield Insurance Brokers, Inc. transmitted the notice of circumstances via email to the designated notice contacts at Northbridge Indemnity Company and Creston National Insurance Co. on November 16, 2022. The email included the full text of the notice letter as an attachment in PDF format and requested written confirmation of receipt.
2.  Overnight Courier. Concurrently, Sarah Voss transmitted hard copies of the notice of circumstances via overnight courier (FedEx, priority overnight) to the designated notice addresses for Northbridge Indemnity Company and Creston National Insurance Co. Tracking numbers for the overnight courier shipments have been retained in the matter file.
3.  Copies to Counsel and Client. Copies of the notice, including confirmation of transmittal, were provided to Patricia "Trish" Nakamura, General Counsel and Corporate Secretary of RGC, and to Douglas Fairchild, Engagement Partner at Calderwood & Harkness LLP. Ms. Nakamura has retained copies in the Company's insurance records.
The dual-method delivery (email and overnight courier) was employed to ensure timely receipt, to create a clear documentary record of the date of notice, and to mitigate any risk that a carrier might assert untimely or defective notice.
V. Coverage Considerations
A. Potential Covered Defense Costs
The following categories of defense costs and expenses may be covered under the D&O insurance program, subject to the terms, conditions, exclusions, and retention provisions of the applicable policies:
Outside Counsel Fees — Calderwood & Harkness LLP. Calderwood & Harkness's fees in connection with the defense of the activist campaign, potential litigation, and regulatory matters are estimated at approximately $1.38 million through the completion of the engagement. This estimate assumes a contested proxy fight through the 2023 Annual Meeting and a moderate level of related litigation activity, but does not account for extended or complex litigation. Calderwood & Harkness's hourly rates for professionals assigned to this matter are as follows:
These rates are subject to the fee arrangements set forth in the engagement letter dated November 15, 2022. In the event that a formal claim is made and coverage is confirmed, the carriers may require adherence to panel counsel arrangements or billing guidelines; this will be assessed as the matter progresses.
Financial Advisory Fees — Calloway Pinnacle Trust Bank The Company has engaged Calloway Pinnacle Trust Bank as its financial advisor in connection with the activist campaign. The engagement is led by Thomas V. Ashford, Managing Director. Calloway Wainwright's fees will cover analysis of Pinnacle Harbor's strategic proposals, evaluation of alternatives (including the potential sale or spin-off of the interactive gaming division), and advice to the Board and the Special Committee on shareholder value and capital allocation. Financial advisory fees are potentially recoverable as defense costs under the D&O program, depending on the scope of the engagement and the applicable policy language.
Proxy Solicitation Costs — Whitfield Morrow Partners, LLC. The Company has engaged Whitfield Morrow Partners, LLC as its proxy solicitation firm. The engagement is led by Denise Cavanaugh, Senior Vice President. Whitfield Morrow will assist the Company in soliciting shareholder votes, communicating with institutional investors and proxy advisory firms, and managing the mechanics of the proxy contest. Proxy solicitation costs are frequently covered under D&O policies as defense costs incurred in connection with an activist campaign or proxy contest, although coverage will depend on the specific policy language and carrier interpretations.
Investor Relations Advisory Fees — Harlan Ridge Communications, LLC. The Company has engaged Harlan Ridge Communications, LLC as its investor relations and communications advisor. The engagement is led by Philip Navarette, Partner. Harlan Ridge will assist with shareholder outreach, public messaging, and media relations during the activist campaign. The recoverability of investor relations advisory fees under D&O coverage is a developing area and may be subject to carrier scrutiny; these fees should be tracked separately to facilitate any coverage analysis.
Litigation Defense Costs. In the event that Pinnacle Harbor or other parties commence litigation proceedings against the Company or its directors and officers — including actions under the Delaware General Corporation Law, federal securities law claims, breach of fiduciary duty claims, or proceedings related to proxy solicitation materials — the costs of defending such litigation (including attorneys' fees, expert witness fees, court costs, and related expenses) would constitute defense costs potentially recoverable under the D&O insurance program.
B. SIR / Retention
The $500,000 self-insured retention under the Northbridge Indemnity primary policy must be satisfied before coverage attaches for Side B and Side C claims. The retention is typically satisfied by the Company's payment of defense costs and other covered expenses up to the $500,000 threshold. Once the retention has been exhausted, the Northbridge Indemnity primary policy responds for additional defense costs and losses up to its $15,000,000 aggregate limit.
Defense costs are expected to erode both the retention and the policy limits under a "defense costs within limits" structure, meaning that every dollar paid in defense costs reduces the aggregate limits available for indemnity payments. Given the estimated defense costs of approximately $1.38 million for outside counsel alone, plus financial advisory, proxy solicitation, and investor relations fees, there is a realistic possibility that a substantial portion of the primary layer limits could be consumed by defense costs if the activist campaign escalates into contested litigation. This erosion dynamic should be monitored closely and communicated to the client.
It should be noted that Side A claims — losses sustained by individual directors and officers where the Company is unable or unwilling to provide indemnification — are typically not subject to the retention. This distinction may become relevant if individual directors or officers face personal claims in a context where corporate indemnification is unavailable.
C. Policy Renewal Considerations
The current policy period under both the Northbridge Indemnity primary policy and the Creston National first excess policy expires on January 1, 2023. The renewal process for the 2023 policy year was already underway at the time of the notice submission. The filing of a notice of circumstances during the current policy period may affect the renewal terms in several respects:
1.  Premium Impact. Carriers may seek to increase premiums for the renewal period in light of the reported activist campaign and the potential for claims.
2.  Exclusion of Reported Circumstances. Renewal policies may include a specific exclusion for claims arising from the circumstances reported in the notice of circumstances. This is a standard market practice, as the purpose of the notice of circumstances mechanism is to allocate those circumstances to the current policy year; the renewal policy would then exclude those circumstances from its coverage.
3.  Continuity of Coverage. Coordination with Glenmore Caulfield Insurance Brokers, Inc. (Sarah Voss) is recommended to ensure a seamless transition of coverage to the renewal policy period and to ensure that the reported circumstances are properly "linked" to the current 2022 policy year. Any gap or ambiguity in the allocation of circumstances between the expiring and renewal policies could result in coverage disputes.
For completeness, the D&O insurance program was subsequently renewed effective January 1, 2023. The specific terms of the renewal are not addressed in this memorandum but should be reviewed separately to confirm the treatment of the reported circumstances and the scope of any exclusions or endorsements in the renewal policies.
D. Potential Exclusions / Limitations
Several policy exclusions and limitations warrant attention in connection with the coverage analysis:
Insured vs. Insured Exclusion. Most D&O policies contain an exclusion for claims brought by one insured person against another insured person or by the Company against its own directors or officers. Analysis is needed to determine whether any cross-claims between current directors or officers and the Company — or claims brought by one director against another in connection with the Board's response to the activist campaign — could trigger this exclusion. In a contested board-seat campaign, the insured-vs.-insured exclusion may become relevant if internal disputes arise regarding defensive measures, corporate governance, or strategic direction. The scope and applicability of any carve-outs to this exclusion (e.g., whistleblower carve-outs, derivative suit carve-outs) should be reviewed.
Prior Knowledge / Pending and Prior Litigation Exclusions. The policies may contain exclusions for claims arising from facts or circumstances known to the insured prior to the inception of the policy, or for claims arising from litigation pending or threatened prior to the policy period. Based on our review to date, no prior claims, litigation, or regulatory proceedings related to the Pinnacle Harbor campaign or the circumstances reported in the notice have been identified. Pinnacle Harbor's accumulation of shares began in approximately June 2022, which is within the current policy period (inception: January 1, 2022). Accordingly, the prior knowledge and pending/prior litigation exclusions should not apply, but this assessment should be confirmed upon receipt of any carrier reservation of rights letters.
Regulatory / Governmental Action Exclusion. Certain D&O policies contain exclusions or limitations for claims brought by governmental or regulatory bodies. If state gaming regulatory authorities become involved in the activist campaign — for example, by initiating suitability investigations of Pinnacle Harbor's nominees or reviewing the fitness of the Company's governance in light of the activist challenge — coverage for the costs of responding to such regulatory inquiries could be affected by this exclusion. A detailed review of the policy language is warranted, and the issue should be flagged for monitoring.
VI. Coordination and Next Steps
A. Broker Communication
On November 16, 2022, Marcus Leung spoke by telephone with Sarah Voss, Senior Vice President at Glenmore Caulfield Insurance Brokers, Inc., to confirm receipt of the notice of circumstances and to discuss the anticipated carrier response timeline. Ms. Voss confirmed that she had received the notice package and that she would transmit the notice to both Northbridge Indemnity Company and Creston National Insurance Co. on the same day, November 16, 2022. Ms. Voss indicated that she expected to receive initial acknowledgments of receipt from both carriers within five to ten business days, and that she would provide written confirmation of receipt to Calderwood & Harkness and to Patricia Nakamura upon receiving the same from the carriers.
Ms. Voss also noted that she would advise the carriers that no formal claim had been asserted and that the notice was being submitted on a precautionary basis to preserve coverage for potential future claims. She indicated that she did not anticipate any immediate coverage issues but cautioned that Northbridge Indemnity may, as a matter of course, issue a reservation of rights letter acknowledging receipt of the notice while reserving the right to evaluate coverage if and when a formal claim is made.
B. Carrier Response
As of the date of this memorandum, written acknowledgment from Northbridge Indemnity Company and Creston National Insurance Co. has not yet been received. Upon receipt of any carrier communications — including, without limitation, acknowledgment letters, reservation of rights letters, coverage position letters, or requests for additional information — such communications should be forwarded promptly to Calderwood & Harkness LLP (attention: Douglas Fairchild and Marcus Leung) for review and analysis.
Any reservation of rights letter issued by a carrier should be carefully reviewed to identify specific coverage defenses, exclusions, or conditions asserted by the carrier. If a carrier denies coverage or asserts a significant coverage defense, a supplemental coverage analysis memorandum will be prepared and circulated for discussion.
C. Ongoing Reporting Obligations
The policies require ongoing reporting of material changes to the circumstances originally noticed. Supplemental notices should be submitted to the carriers, through the broker, if any of the following developments occur:
(i) The filing of any lawsuit, arbitration demand, or regulatory proceeding against the Company or any director or officer in connection with the Pinnacle Harbor activist campaign;
(ii) The commencement of a formal proxy contest, including the filing of preliminary or definitive proxy materials by Pinnacle Harbor or the Company;
(iii) The adoption by the Board of any defensive measures in response to the activist campaign, including but not limited to the adoption of a stockholder rights plan (commonly referred to as a "poison pill"), amendments to the Company's bylaws, or changes to advance notice or proxy access provisions;
(iv) The receipt of any formal demand for monetary relief directed at any director or officer in connection with the reported circumstances;
(v) The initiation of any investigation, inquiry, or examination by the SEC, any state gaming regulatory authority, or any other governmental body in connection with the reported circumstances; or
(vi) Any other material development that, in the judgment of outside counsel or the General Counsel, could give rise to a covered claim or materially alter the risk profile communicated to the carriers in the original notice.
Douglas Fairchild (Calderwood & Harkness) and Patricia Nakamura (RGC General Counsel) should be kept apprised of any carrier communications, including acknowledgment letters, reservation of rights letters, requests for additional information, and coverage position letters. All supplemental notices should be coordinated through Sarah Voss at Glenmore Caulfield to ensure consistency and proper documentation.
D. Document Retention
Copies of the following documents should be maintained in the matter file under Matter No. 1033-00003 and in RGC's insurance records:
•  The notice of circumstances letter dated November 16, 2022, as submitted to the carriers;
•  All carrier correspondence, including acknowledgment letters, reservation of rights letters, coverage position letters, and requests for additional information;
•  This memorandum;
•  Copies of the relevant policy declarations pages and policy forms;
•  Copies of the Pinnacle Harbor preliminary Schedule 13D and Demand Letter;
•  Records of all communications between Calderwood & Harkness, Glenmore Caulfield, and the carriers regarding the notice and coverage matters; and
•  Any supplemental notices submitted to the carriers.
All documents should be clearly marked as privileged and confidential attorney work product to preserve applicable protections.
VII. Attachments
The following documents are appended to this memorandum for reference:
Attachment A: Copy of Notice of Circumstances letter submitted to Northbridge Indemnity Company and Creston National Insurance Co. (via Glenmore Caulfield Insurance Brokers, Inc.), dated November 16, 2022.
Attachment B: Policy declarations page — Northbridge Indemnity Company, Policy No. NBI-DOP-1025-00008 (policy period: January 1, 2022 – January 1, 2023).
Attachment C: Policy declarations page — Creston National Insurance Co., Policy No. CNI-XS-2022-31004 (policy period: January 1, 2022 – January 1, 2023).
Attachment D: Pinnacle Harbor Capital Partners, LP — Preliminary Schedule 13D filed with the SEC on November 10, 2022 (excerpt).
This memorandum was prepared by Marcus Leung, Associate, Calderwood & Harkness LLP. Questions regarding the content of this memorandum or the notice of circumstances should be directed to Douglas Fairchild, Engagement Partner, at (702) 555-7100 or dfairchild@calderwoodharkness.com.
— END OF MEMORANDUM —
Item | Detail
Carrier | Northbridge Indemnity Company
Domicile | Connecticut
Policy Number | NBI-DOP-1025-00008
Policy Period | January 1, 2022 – January 1, 2023
Aggregate Limit of Liability | $15,000,000
Self-Insured Retention (SIR) | $500,000
Insuring Agreements | Side A (non-indemnifiable loss to directors and officers); Side B (company reimbursement for indemnified loss); Side C (entity securities coverage)
Named Insured | Redstone Gaming Corp. and its directors and officers, as defined in the policy
Item | Detail
Carrier | Creston National Insurance Co.
Domicile | Illinois
Policy Number | CNI-XS-2022-31004
Policy Period | Concurrent with primary (January 1, 2022 – January 1, 2023)
Limit of Liability | $10,000,000 excess of $15,000,000
Attachment Point | Exhaustion of the Northbridge Indemnity primary layer
Terms and Conditions | Follow-form to Northbridge Indemnity primary policy (Policy No. NBI-DOP-1025-00008)
Professional Level | Hourly Rate
Partners | $1,450
Senior Associates | $1,050
Associates | $850