Contract analysis

1. Executive Summary This report provides the quarterly litigation exposure update for the matter styled Maciejewski v. Nexford Industrial Holdings Inc., Case No. 2022-L-002847, pending in the Circuit Court of Cook County, Illinois, County Department, Law Division. This report is submitted for the period covering Q1 2023 (January 1, 2023 through March 31, 2023) in accordance with the portfolio company reporting requi

2. Parties 2.1 Defendant (Client) Nexford Industrial Holdings Inc. is a Delaware corporation headquartered in Schaumburg, Illinois. Nexford is an industrial manufacturing company specializing in the design and production of precision-machined components for heavy equipment and infrastructure applications. The company serves customers in the construction, mining, transportation, and energy sectors, and is a significan

3. Claims and Legal Theories The complaint, filed on March 15, 2022, asserts three counts against Nexford. Each count is summarized below, along with the principal legal standards and Nexford's primary defenses. 3.1 Count I — Retaliatory Discharge (Illinois Common Law) Count I of the complaint alleges that Nexford terminated Mr. Maciejewski's employment in retaliation for his reporting of workplace safety violations,

4. Factual Background 4.1 Employment History Mr. Maciejewski was hired by Nexford on June 12, 2017 as a Quality Assurance Supervisor at the company's Elgin manufacturing facility. His starting annual salary was $64,000. In that role, Mr. Maciejewski was responsible for overseeing quality assurance protocols on the production floor, managing a team of quality inspectors, and ensuring that manufactured components met c

5. Affirmative Defenses Nexford has asserted the following affirmative defenses in its Answer and Affirmative Defenses, filed April 18, 2022: Legitimate Non-Retaliatory Business Reason. Nexford's principal affirmative defense is that Mr. Maciejewski's termination resulted from documented, repeated attendance violations that were addressed through the company's progressive discipline procedures as set forth in the Nex

6. Litigation History and Current Procedural Posture 6.1 Pre-Dormancy Activity (March 2022 – October 2022) The litigation commenced and progressed through initial pleading, case management, and early discovery phases between March and October 2022, as detailed in the following chronology: March 15, 2022: Plaintiff Darren K. Maciejewski, through counsel Gerald P. Hess of Hess & Loughlin, P.C., filed a three-count comp

7. Exposure Assessment 7.1 Worst-Case Exposure Estimate Calderwood & Harkness has prepared an internal worst-case exposure estimate for this matter, representing the maximum reasonably foreseeable adverse outcome if the case were to proceed to trial and the plaintiff were to prevail on all claims. This estimate is intended for internal risk management and reserve-setting purposes and does not represent a prediction o

1. Plaintiff's counsel inactivity. Gerald Hess has been completely inactive since October 14, 2022 — a period of more than five months as of the date of this report. He has failed to respond to meet-and-confer correspondence, failed to appear at two consecutive status conferences, and failed to serve any discovery responses or expert disclosures. 2. discovery failures. Plaintiff failed to respond to Nexford's First S

3. Motion to Compel denied. Plaintiff's only substantive discovery motion — the Motion to Compel comparator personnel files — was denied on September 9, 2022. No narrowed request was ever filed.

4. OSHA findings support Nexford. OSHA conducted an independent on-site inspection in response to Mr. Maciejewski's complaint and found no violations. This objective finding directly undermines the factual premise of the plaintiff's claims.

5. Strong documentation of legitimate discipline. Nexford possesses contemporaneous, well-documented records of progressive discipline for attendance violations, including a first written warning that predates the OSHA complaint. Plant Manager Bosch and VP Human Resources Donnelly are available to testify regarding the discipline and termination process.

6. DWP trajectory. The case is on a trajectory toward dismissal for want of prosecution following the March 16, 2023 show cause order. The April 20 hearing represents a significant milestone in this process. 7.3 Probability-Weighted Exposure Given the current dormancy of the case and the trajectory toward dismissal for want of prosecution, the probability-weighted exposure for this matter is estimated as de minimis.

8. Insurance Coverage The following summarizes the insurance coverage applicable to this matter: Verdant Mutual acknowledged coverage for this matter by letter dated April 11, 2022, subject to a reservation of rights. The reservation of rights letter reserves Verdant's right to deny coverage with respect to certain categories of damages and certain policy exclusions, consistent with standard EPLI reservation of right

9. Legal Fees and Budget 9.1 Billing Rates The following billing rates apply to the Calderwood & Harkness engagement team assigned to this matter: These rates were approved by Verdant Mutual Insurance Company in connection with the panel counsel engagement and are consistent with Verdant's billing guidelines for matters of this nature and complexity. 9.2 Fees Incurred Through Active Period The following table summari

10. Next Steps and Recommended Actions Based on the current posture of the matter, Calderwood & Harkness recommends the following actions for the next reporting period:

1. Attend April 20, 2023 show cause hearing. Nadia Petrov will appear on behalf of Nexford at the April 20, 2023 show cause hearing before Judge Vasquez-Torres. This hearing is the next critical event in the case and may result in dismissal of the action if Plaintiff's counsel again fails to appear or is unable to show good cause for the prior non-appearances and absence of prosecution activity. Calderwood & Harkness

2. Continue periodic docket monitoring. Calderwood & Harkness will continue to conduct regular docket checks in Case No. 2022-L-002847 for any new filings by Plaintiff, any new attorney appearances, or any court orders affecting the status of the case.

3. Monitor ARDC for Hess license status. Calderwood & Harkness will continue to periodically review ARDC records for any changes to Gerald P. Hess's license status, including any suspension, inactive status, or disciplinary proceedings that may affect his ability to represent the plaintiff.

4. Maintain litigation hold. Nexford should continue to maintain the litigation hold that was implemented across all Nexford facilities and key custodians upon receipt of the complaint. The litigation hold applies to all documents and electronically stored information potentially relevant to this matter and is directed to the following key custodians: Frank Bosch (Plant Manager, Elgin), Catherine Donnelly (VP Human R

5. No settlement discussions. No settlement discussions or overtures are warranted at this time given Plaintiff's counsel's complete inactivity and the trajectory toward dismissal. Initiating settlement discussions in the current posture could inadvertently revive a dormant case and would not be in Nexford's interest.

6. Quarterly reporting to Verdant Mutual. Calderwood & Harkness will provide an updated quarterly report to Verdant Mutual Insurance Company, consistent with the insurer's reporting requirements and the terms of the panel counsel engagement.

7. Next quarterly report to Veltrano. The next Quarterly Litigation Exposure Report to Veltrano Capital Partners will be prepared for the Q2 2023 reporting period, with an estimated delivery date of June 30, 2023.

11. Contact Information For questions regarding this report or the status of this matter, please contact the following individuals: Defense Counsel: Bernard Crawford, Responsible Partner Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606 Telephone: (312) 555-7200 Email: bcrawford@calderwoodharkness.com Nadia Petrov, Lead Associate (Day-to-Day Contact) Calderwood & Harkness LLP 227 West Mon