Contract analysis

I. Identification of Pending Claims For purposes of this letter and the coordination protocols described herein, the two pending product-liability actions implicating the Nexford product-liability tower are identified as follows. A. Higgins v. Nexford Conveyor Systems, LLC et al. This action was filed on September 14, 2021, in the Circuit Court of Will County, Illinois, and has been assigned Case No. 2021-L-04382. Th

II. Product-Liability Insurance Tower Structure For HBS's reference and to facilitate effective coordination on coverage matters, we provide below a summary of the full product-liability insurance tower currently in force for the Nexford corporate family. This information is highly confidential, and we ask that HBS treat it accordingly, consistent with the confidentiality and privilege protocols set forth in Section

III. Obligation to Cooperate with Midland Casualty as Primary Insurer A. Duty to Cooperate Under the Midland Casualty primary GL/PL policy (Policy No. MCS-GL-2021-55671), each insured — including NCS and Triton as named insured subsidiaries of Nexford — is subject to a comprehensive cooperation clause requiring full and timely cooperation with the insurer in the investigation, defense, and resolution of all covered c

1. Respond promptly to insurer requests. HBS should respond to all reasonable requests from Midland Casualty for information, documents, and access to witnesses in a timely manner. Any request from Midland Casualty that HBS believes is overly broad, unduly burdensome, or raises privilege concerns should be brought to C&H's attention immediately so that we can evaluate the request and, if necessary, work with Midland

2. Coordinate discovery strategy. HBS should coordinate its discovery strategy in each action with Midland Casualty's designated claims adjuster. We understand that the current claims adjuster assigned to the Nexford account at Midland Casualty is [to be confirmed by Donna Kowalski]. While HBS retains professional independence in the conduct of the defense, it is essential that Midland Casualty be kept informed of si

3. Provide material pleadings and orders. HBS should provide Midland Casualty with copies of all material pleadings, motions, and court orders contemporaneously with their filing or receipt. This includes, without limitation, complaints and amended complaints, answers, motions to dismiss and responses thereto, motions for summary judgment, discovery motions and rulings, scheduling orders, and any order setting or mod

IV. Settlement Consent Requirements Under the Midland Casualty primary policy, the insured may not settle any claim or suit without the insurer's prior written consent. This settlement consent provision is a standard and strictly enforced condition of coverage, and failure to comply with it could result in Midland Casualty disclaiming liability for any settlement amount. We therefore request that HBS observe the foll

1. No unauthorized settlement activity. HBS should not engage in settlement discussions, mediation, or negotiate any settlement terms — even on a preliminary, exploratory, or without-prejudice basis — without first notifying both Midland Casualty (through its designated claims adjuster) and Nexford's internal team (Trevor Haines and Donna Kowalski). This applies equally to formal and informal settlement overtures, wh

2. Coordination with C&H on settlement authority. If settlement authority is sought from Nexford's board of directors, management, or any internal committee with authority to approve settlements, HBS should simultaneously coordinate with C&H so that the coverage implications of any proposed settlement can be fully evaluated. This includes an assessment of whether the proposed settlement amount, together with defense

3. Erosion into excess layers. For any settlement or combination of settlements that would cause aggregate paid losses (including defense costs) to exceed $10 million — thereby reaching the Great Basin Insurance Company 1st Excess/Umbrella layer at its $10 million attachment point — C&H must be consulted in advance so that proper notice can be given to all affected excess carriers. Failure to provide timely notice to

4. Varying consent requirements. HBS should be aware that the settlement consent requirements may differ across the excess layers of the tower. The Great Basin 1st Excess/Umbrella policy, the Cornerstone 2nd Excess policy, and the Allegheny Pacific 3rd Excess policy each contain their own settlement consent and cooperation provisions, which may impose different standards and procedures from those in the Midland Casua

V. Defense Cost Reporting Protocols A. Reporting Obligation to Midland Casualty A critical feature of the Midland Casualty primary GL/PL policy that must inform HBS's approach to both pending actions is that defense costs under the policy are included within the per-occurrence and aggregate limits. The Midland Casualty policy is not a "defense outside limits" policy; rather, all defense costs incurred in connection w

VI. Duty to Notify C&H of Material Developments Affecting Tower Erosion A. Material Developments Requiring Notification Beyond the specific defense cost reporting protocols described above, HBS should promptly notify C&H of any material development in either the Higgins or Consolidated Builders action that could affect the product-liability tower, the coverage analysis, or Nexford's overall exposure. Notifications un

VII. Coordination During the Renewal Period C&H notes that the product-liability tower is currently in renewal marketing for the policy period commencing July 1, 2022. The broker submission was circulated by Ashford Breckinridge to the insurance market on May 3, 2022, and carrier quotes are expected to be received through June 8, 2022. The renewal effective date is July 1, 2022, and Nexford's risk management team exp

1. Referral of carrier inquiries. If HBS is contacted directly by any carrier, underwriter, broker representative, or claims auditor regarding the pending claims, HBS should not provide substantive responses but should instead refer such inquiries to Donna Kowalski or Trevor Haines at Nexford, and should simultaneously notify C&H of the inquiry. This protocol is intended to ensure that all communications with the ins

2. Case status information. C&H is analyzing the interaction of the pending claims with the renewal terms currently being negotiated, including prior-acts provisions, known-claims exclusions, and pending/prior-litigation exclusions. In connection with this analysis, C&H may request HBS's input on the current posture of each case, including factual and legal assessments, settlement exposure estimates, and anticipated

3. Consistency with applications. To the extent that Nexford's renewal applications or broker submissions contain representations regarding the pending claims, HBS should review those representations upon request to confirm their accuracy and completeness. C&H will coordinate the review process with Ashford Breckinridge and Nexford's risk management team.

VIII. Confidentiality and Privilege All communications between C&H and HBS regarding coverage matters, tower structure, tower erosion analysis, and related topics are intended to be, and shall be treated as, protected by the attorney-client privilege and/or the work-product doctrine. These communications are made for the purpose of rendering and obtaining legal advice on behalf of Nexford and its subsidiaries, and th

1. HBS should not disclose any coverage analysis, tower structure details, erosion projections, or C&H work product to Midland Casualty, Great Basin, Cornerstone, Allegheny Pacific, or any other carrier, underwriter, or broker, without prior written authorization from Nexford's General Counsel, Priya Sundaram, or from C&H. Unauthorized disclosure of coverage analysis to a carrier could waive the attorney-client privi

2. To the extent that HBS must communicate with Midland Casualty's claims personnel — as it must in the ordinary course of the defense — such communications should be limited to factual case updates, billing submissions, and consent requests. HBS should not disclose coverage opinions, coverage strategies, tower structure details, or any analysis prepared by C&H in any communication with Midland Casualty or its repres

3. All written communications between C&H and HBS regarding the matters addressed in this letter should bear the legend "Attorney-Client Privileged and Confidential / Attorney Work Product" and should be clearly identified as communications between counsel for Nexford.

4. HBS should maintain all documents and communications received from C&H in connection with the coverage coordination engagement in a manner that preserves their privileged and confidential status, separate from files that may be shared with or accessible to Midland Casualty or any other carrier.

IX. Contact Information and Logistics For ease of reference and to facilitate efficient communication, we provide below the primary contact information for the C&H and Nexford teams working on this matter, and we request that HBS confirm the contact information for its team. Calderwood & Harkness LLP: Douglas Fairchild, Partner Real Estate Department — Insurance Coverage Practice 155 North Wacker Drive, Suite 4200 Ch

X. Closing C&H looks forward to close and effective collaboration with HBS throughout the life of the pending product-liability claims, the current renewal cycle, and any future matters that may arise within the product-liability tower. We are confident that the coordination protocols outlined in this letter will serve Nexford's interests by ensuring that all coverage obligations are met, that tower erosion is monito