Contract analysis

I. Purpose and Executive Summary This memorandum sets forth eighteen (18) prioritized policy wording improvements that Calderwood & Harkness LLP ("C&H") recommends Nexford Industrial Holdings Inc. ("Nexford" or the "Company") negotiate with its incumbent and prospective carriers through Ashford Breckinridge LLP ("Ashford"), the Company's broker of record, in connection with the renewal of the directors' and officers'

II. Methodology and Priority Framework A. Priority Tier Definitions C&H has assigned each of the eighteen negotiation points one of three priority designations, defined as follows: • Critical — Coverage gaps that could leave individual directors and officers, or the Company itself, materially exposed to uninsured or underinsured loss in realistic claim scenarios. Points designated as Critical are non-negotiable in th

1. Policy-by-Policy Wording Comparison. C&H has conducted a detailed, provision-by-provision comparison of the current policy forms across all nine layers of the two towers (five D&O layers and four PL layers), as well as the available renewal and replacement quotes. This comparison identified instances of non-follow-form language, definitional inconsistencies, and exclusion scope variances between layers within the

2. Nexford Risk Profile Analysis. C&H has analyzed the Company's specific risk profile in constructing and prioritizing these negotiation points. Key risk characteristics include: (a) PE-backed ownership structure, with Veltrano Capital Partners Fund IV holding 68.5% of the Company's equity following the June 15, 2018 leveraged buyout; (b) a nine-member board of directors with five sponsor-appointed directors (includ

3. Actuarial Loss Modeling. Kessler Quinn Advisory Group has provided actuarial loss modeling for the PL tower, reflecting a total five-year incurred loss figure of $15.12 million, comprising $4.72 million in paid losses, $8.3 million in open case reserves, and $2.1 million in incurred but not reported ("IBNR") loss estimates. This modeling has informed the priority designations and premium reasonableness assessments

4. Carrier Quote Comparison Matrices. C&H prepared carrier quote comparison matrices for both the D&O and PL towers, dated June 10, 2022, which compare the renewal and replacement quotes on a line-by-line basis across key coverage terms, conditions, exclusions, limits, retentions, and pricing. These matrices form the factual basis for many of the observations in this memorandum. C. Role of Fallback Positions Each neg