Contract analysis

I. PURPOSE AND SUMMARY This memorandum documents the formal closure of Calderwood & Harkness LLP Matter No. 1005-00005 following the successful defense of Nexford Industrial Holdings Inc. ("Nexford" or "NIH") against claims brought by Cardinal Peak Industries ("CPI") in Case No. 2022-L-008471, filed in the Circuit Court of Cook County, Illinois, County Department, Law Division. The purpose of this memorandum is to pr

II. CLIENT AND PARTY INFORMATION A. Client — Nexford Industrial Holdings Inc. Full Legal Name: Nexford Industrial Holdings Inc., a corporation organized and existing under the laws of the State of Delaware and headquartered in the State of Illinois. Principal Business Address: 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085 Delaware Charter Number: 7284159 Employer Identification Number (EI

III. MATTER BACKGROUND AND FACTUAL SUMMARY A. The Master Supply Agreement The dispute at the center of this matter arose under a Master Supply Agreement bearing reference number MSA-NIH-CPI-2020-001, executed on January 15, 2020, between Nexford Industrial Holdings Inc., as Buyer, and Cardinal Peak Industries, as Seller (the "MSA"). The MSA governed the terms under which Cardinal Peak would supply hot-rolled coil ("H

Section 7.4(a) — Surcharge Pass-Through and Notice Requirement: Section 7.4(a) authorized the Seller to pass through to the Buyer documented raw-material surcharges arising from increases in scrap, energy, and alloy costs. However, the Seller was required to deliver a written Surcharge Notice to the Buyer, accompanied by supporting documentation, no later than fifteen (15) business days after the end of the applicabl

Section 7.4(b) and Exhibit C — Surcharge Methodology: Section 7.4(b) required that surcharges be calculated in accordance with the methodology set forth in Exhibit C to the MSA. Exhibit C specified that surcharges were to be calculated using two published, independently verifiable indices: (i) the Ferrous Scrap Index as published by Platts/SPI, and (ii) the Industrial Energy Cost Index. These published indices were t

Section 7.4(c) — Cap Provision: Section 7.4(c) imposed a cap on surcharges, providing that the aggregate monthly surcharge could not exceed twelve percent (12%) of the applicable Base Price without the Buyer's prior written consent. This cap served as a risk-allocation mechanism, ensuring that Nexford's exposure to surcharge pass-throughs was bounded in the absence of affirmative consent to higher amounts. For four o

Section 7.4(d) — Dispute Procedure: Section 7.4(d) established a tiered dispute resolution process for surcharge disputes. The Buyer was required to notify the Seller of a disputed surcharge within thirty (30) calendar days of receipt of the applicable Surcharge Notice. Unresolved disputes were to be escalated to designated senior officers of each party for resolution, and failing resolution at the senior officer lev

1. Late Surcharge Notices: CPI failed to deliver compliant Surcharge Notices within the fifteen-business-day deadline prescribed by Section 7.4(a) for seven of the fourteen disputed months. In several instances, notices were delivered weeks or even months late. Nexford contended that the notice requirement was a condition precedent to CPI's entitlement to surcharge payments, and that CPI's failure to comply with this

2. Methodology Deviation: For the months in which CPI did deliver timely notices, the surcharge calculations were not performed using the published indices specified in Exhibit C (the Ferrous Scrap Index and the Industrial Energy Cost Index), as required by Section 7.4(b). Instead, CPI used an internal "blended cost" metric that aggregated CPI's actual raw-material costs across multiple facilities and product lines.

3. Cap Exceedances: For four of the disputed months, CPI invoiced surcharges that exceeded the 12% cap set forth in Section 7.4(c) without having obtained Nexford's prior written consent. The excess surcharge amounts above the contractual cap for these four months totaled approximately $1.08 million. It is important to note that some overlap existed among these three defense categories. For certain months, a surcharg

IV. PROCEDURAL HISTORY AND CHRONOLOGY OF THE MATTER A. Pre-Litigation Phase The dispute moved from the commercial to the legal sphere in mid-2022, following months of escalating disagreement between the parties' respective procurement and sales teams regarding the surcharge invoices. June 10, 2022: Blackwood Stein & Associates LLP, on behalf of Cardinal Peak Industries, transmitted a formal demand letter to Nexford d

V. SETTLEMENT TERMS SUMMARY The material terms of the Settlement Agreement and Mutual Release executed on August 18, 2023 are summarized as follows: Total Settlement Amount: $1,890,000.00 (one million eight hundred ninety thousand dollars). This amount represents approximately forty percent (40%) of CPI's claimed principal amount of $4.73 million. Payment Structure: The settlement amount is payable by Nexford in two

VI. OUTCOME ANALYSIS A. Financial Outcome The following table summarizes the financial outcome of the matter: The settlement amount of $1.89 million represents a discount of approximately sixty percent from CPI's claimed principal amount of $4.73 million. After accounting for total legal costs of $272,085, the net savings to Nexford was approximately $2.568 million relative to an adverse judgment on CPI's full claim.

VII. FINANCIAL SUMMARY — FEES AND COSTS A. Billing Rate Summary The following standard billing rates were applicable to Matter No. 1005-00005: These rates are consistent with the standard rates set forth in the engagement letter and were not subject to any discount or alternative fee arrangement. B. Total Fees Billed Total professional fees billed on Matter No. 1005-00005 were $243,670.00. This amount was within the

VIII. KEY DOCUMENTS AND WORK PRODUCT INDEX The following is a comprehensive index of key documents and work product generated in connection with Matter No. 1005-00005. All documents are indexed and filed in the firm's document management system under the matter number. Engagement and Administrative:

1. Engagement Letter (August 22, 2022)

2. Conflict Check Memorandum (August 21, 2022)

3. Litigation Hold Notice (August 23, 2022) Client Communications and Strategy:

4. Client Letter re Demand Response Strategy (August 25, 2022)

5. Initial Case Assessment Memorandum (August 30, 2022)

6. Litigation Strategy and Budget Memorandum (September 22, 2022)

7. Status Report Letter to Client — Q4 2022 (December 20, 2022)

8. Status Report Letter to Client — Q1 2023 (March 30, 2023)

9. Email to Marlowe Asset Management Bluff re Settlement Authority Request (July 18, 2023)

10. Post-Mediation Report to Client (August 4, 2023) Legal Research and Analysis:

11. Research Memorandum — Illinois Surcharge Pass-Through Provisions and Contract Interpretation (September 8, 2022)

12. Memorandum re MSA Section 7.4 Surcharge Clause Analysis (September 12, 2022)

13. Memorandum re Unjust Enrichment Claim Defense (October 15, 2022)

14. Memorandum re Analysis of Cardinal Peak's Expert Report (Dr. Voss) (April 20, 2023) Pleadings and Court Filings:

15. Answer and Affirmative Defenses (filed September 19, 2022)

16. Counterclaim (filed October 3, 2022)

17. Memorandum in Opposition to Motion to Dismiss Counterclaim (filed November 2, 2022)

18. Joint Motion to Stay Litigation Pending Mediation (filed May 22, 2023)

19. Stipulation of Dismissal with Prejudice (filed September 14, 2023) discovery:

20. Nexford's First Set of Interrogatories to CPI (served December 5, 2022)

21. Nexford's First Set of Requests for Production to CPI (served December 5, 2022)

22. Nexford's Responses to CPI's First Set of Interrogatories (served January 9, 2023)

23. Nexford's Responses to CPI's First Request for Production (served January 9, 2023)

24. Deposition Outline — Natalie Gunderson (January 18, 2023)

25. Deposition Summary Memorandum — Natalie Gunderson (January 25, 2023)

26. Deposition Preparation Memorandum — Russell Okonkwo (January 30, 2023) Expert Materials:

27. Expert Retention Letter — Meridian Bridge Consulting LLC (December 12, 2022)

28. Expert Report Rebuttal — Dr. Anita Rosenthal (March 15, 2023) Financial Analysis:

29. Surcharge Invoice Analysis Spreadsheet — March 2021 through May 2022 Mediation:

30. Mediation Strategy Memorandum (June 20, 2023)

31. Mediation Brief (Confidential) (July 26, 2023) Settlement and Closing:

32. Settlement Term Sheet (August 2, 2023)

33. Settlement Agreement and Mutual Release (executed August 18, 2023)

34. Settlement Agreement Redline (C&H comments on Blackwood Stein draft)

35. Letter to Ridgecrest National Bank re Settlement Notice (August 21, 2023)

36. MSA Termination Agreement (effective August 31, 2023)

IX. LENDER AND STAKEHOLDER NOTIFICATIONS Ridgecrest National Bank, N.A.: Settlement notice was provided to Karen Whitmore, Relationship Manager at Ridgecrest National Bank, N.A., on August 21, 2023. This notice was required under Section 6.03(b) of Nexford's $45 million revolving credit facility, dated March 12, 2021 (the "Credit Agreement"), which requires the borrower to provide prompt written notice to the adminis

X. LESSONS LEARNED AND PRACTICE NOTES The following observations are recorded for the benefit of the firm's institutional knowledge and for reference in future matters involving similar issues. A. Contractual Drafting Observations The outcome of this matter underscores the critical importance of precisely drafted surcharge pass-through clauses in supply agreements. The specificity of MSA Section 7.4 — including the f

XI. FILE DISPOSITION AND ADMINISTRATIVE CLOSURE The following administrative steps have been completed or are noted in connection with the closure of Matter No. 1005-00005:

1. All original pleadings, court orders, settlement documents, and correspondence have been indexed and filed in the firm's document management system under Matter No. 1005-00005, in accordance with the Key Documents and Work Product Index set forth in Section VIII of this memorandum.

2. The client file will be retained in accordance with the firm's standard file retention policy and applicable Illinois retention requirements for closed litigation matters. No documents have been identified for return to the client at this time.

3. All invoices have been issued and collected in full. There are no outstanding invoices, unbilled time, or uncollected accounts receivable associated with this matter.

4. There are no pending deadlines, open items, or remaining obligations on the part of Calderwood & Harkness with respect to this matter.

5. The settlement installment due dates have been communicated to the client and confirmed: • Installment 1: $1,134,000.00 due September 17, 2023 • Installment 2: $756,000.00 due November 16, 2023

6. The transition period for outstanding purchase orders under the MSA runs through October 31, 2023. The client has been advised to monitor this transition independently, as Calderwood & Harkness's engagement has concluded. Any future issues arising in connection with the MSA transition or the settlement payment schedule would require a separate engagement.