Contract analysis

I. Executive Summary On January 18, 2023, we took the deposition of Natalie Gunderson, Vice President, Sales & Commercial, at Cardinal Peak Industries ("CPI"). The deposition was conducted at Calderwood & Harkness LLP's offices, 200 South Wacker Drive, Suite 4400, Chicago, Illinois 60606. Gunderson is the principal CPI representative responsible for commercial pricing, surcharge invoicing, and CPI's relationship with

II. Background on the Deponent Natalie Gunderson has served as Vice President, Sales & Commercial, at Cardinal Peak Industries since 2019. She initially joined CPI in 2016 as Director of Pricing & Commercial Strategy and was promoted to her current role approximately three years later. In her capacity as Vice President, Gunderson oversees all commercial pricing activities for CPI's flat-rolled steel product lines, in

III. Key Testimony — Surcharge Notice Timing (Section 7.4(a) — 15 Business Day Requirement) A. The Contractual Requirement Gunderson confirmed during her testimony that she was aware of, and familiar with, MSA Section 7.4(a), which requires the Seller (CPI) to deliver Surcharge Notices, together with supporting documentation sufficient to enable the Buyer (Nexford) to verify the surcharge calculation, no later than f

1. The disputed period (March 2021 through May 2022) was the first time CPI had attempted to pass through surcharges of this magnitude under the MSA. Prior surcharge invoices, if any, had been de minimis, and the surcharge pass-through mechanism had not been materially tested before March 2021.

2. The disputed period was the first time Nexford had formally disputed surcharge invoices under the MSA.

3. Given that the surcharge provisions had not been invoked at scale before this period, there was no established course of dealing with respect to the enforcement or non-enforcement of the 15-business-day notice requirement. These concessions effectively neutralize CPI's potential argument that Nexford acquiesced to late notices through a pattern of prior conduct. Because the surcharge provisions were essentially un

IV. Key Testimony — Exhibit C Surcharge Methodology Deviation A. Contractual Methodology Gunderson confirmed that she was thoroughly familiar with Exhibit C to the MSA, which prescribes the Surcharge Methodology to be used by CPI in calculating any surcharges invoiced to Nexford under Section 7.4. Exhibit C establishes two primary cost indices for surcharge calculations:

1. Ferrous Scrap Index, as reported by Drayton Partners LLC ("Platts/SPI"), which serves as the reference point for raw material cost changes in scrap steel pricing.

2. Industrial Energy Cost Index, a published index measuring changes in industrial energy costs, which serves as the reference point for energy-related cost fluctuations. Gunderson confirmed the agreed baseline scrap cost of $340 per ton and the agreed baseline energy cost of $48 per ton as set forth in Exhibit C. These baselines were established as of the effective date of the MSA (January 15, 2020) and were intende

V. Key Testimony — 12% Surcharge Cap (Section 7.4(c)) A. Awareness of the Cap Gunderson confirmed that she was aware of Section 7.4(c) of the MSA, which provides that "in no event shall the aggregate monthly surcharge exceed 12% of the applicable Base Price for the relevant product category without prior written consent of Buyer." This provision was, by Gunderson's own testimony, a specifically negotiated term of the

VI. Key Testimony — Nexford's Payment History and Disputed Amounts Gunderson's testimony provided a clear overview of the financial landscape of the dispute, confirming key figures that frame Nexford's exposure analysis. The following facts were established through Gunderson's testimony: • During the disputed period (March 2021 through May 2022), CPI issued Surcharge Notices reflecting total surcharges of $6.41 milli

VII. Key Testimony — The Demand Letter and Pre-Litigation Communications Gunderson provided testimony regarding the sequence of events leading up to the commencement of this litigation. She confirmed the following: Engagement of Outside Counsel. The decision to engage outside counsel was made by Patricia Morrow, CPI's General Counsel, in consultation with Frank Delacroix, CPI's President and CEO. Gunderson was not th

VIII. Key Testimony — MSA Negotiation and Course of Dealing Gunderson's testimony regarding the negotiation of the MSA and the parties' course of dealing prior to the disputed period provides important context for Nexford's defenses and undermines CPI's potential equitable arguments. Negotiation of the MSA. Gunderson confirmed that she personally participated in negotiating the MSA, which was executed on January 15,

IX. Key Testimony — Unjust Enrichment and Account Stated Claims In addition to the surcharge-specific testimony summarized above, Gunderson was examined on the factual bases for CPI's alternative causes of action, specifically the unjust enrichment claim (Count II of the Complaint) and the account stated claim (Count III). Unjust Enrichment (Count II) Gunderson was asked to describe her understanding of CPI's unjust

X. Credibility Assessment We provide the following assessment of Gunderson's credibility as a witness, both with respect to the deposition testimony and as a prospective trial witness. Overall Demeanor. Gunderson was generally candid and cooperative throughout the deposition. She answered questions directly for the most part and did not engage in evasive or obstructionist behavior. She appeared well-prepared by her a

XI. Impact on Nexford's Three Categories of Defense Gunderson's deposition testimony materially advances Nexford's defense position across all three categories. We summarize the impact below. A. Late Notices ($2.18 Million) Gunderson's admissions confirm the factual predicate necessary to support Nexford's defense based on untimely Surcharge Notices: • Seven (7) of the fourteen (14) disputed months had Surcharge Noti

XII. Strategic Recommendations Based on our analysis of Gunderson's deposition testimony, we recommend the following actions.

1. Mediation Preparation. Gunderson's admissions should be featured prominently in Nexford's mediation preparation materials. The combination of (a) confirmed late notices for seven months, (b) acknowledged methodology deviations without consent, and (c) admitted cap exceedances without written consent provides Nexford with significant leverage in settlement discussions. We recommend preparing a concise mediation bri

2. Dispositive Motions. If the matter does not resolve at mediation, Gunderson's testimony provides a strong factual basis for dispositive motions. In particular, we recommend considering motions for partial summary judgment on: • The $2.18 million in surcharges associated with the seven late-notice months, arguing that timely delivery of the Surcharge Notice was a condition precedent to CPI's entitlement to the surc

3. Key Deposition Excerpts to Flag. The following categories of testimony should be catalogued by transcript page reference and prepared for use in motion practice, mediation, and trial: • Admission of late delivery for seven months (specific pages to be catalogued upon receipt of final transcript); • Acknowledgment that CPI used a blended cost metric that deviated from the Exhibit C methodology; • Concession that no

4. Expert Report Coordination. We recommend coordinating with Dr. Anita Rosenthal at Meridian Bridge Consulting LLC, Nexford's damages rebuttal expert, to incorporate Gunderson's admissions regarding the blended cost methodology into the expert report. Specifically, Gunderson's confirmation that CPI used an internal composite metric, her description of its components, and her inability to reconcile the blended cost f

5. Cross-Reference with Document Production. Gunderson's testimony should be cross-referenced with documents produced by CPI in response to Nexford's First Set of Requests for Production, served December 5, 2022. In particular, we should compare Gunderson's description of CPI's internal pricing worksheets and transmittal logs with the documents actually produced, to identify any potential gaps or inconsistencies in C

6. Preparation for Okonkwo Deposition. The upcoming deposition of Russell Okonkwo, Nexford's VP of Procurement, scheduled for February 7, 2023, should be prepared to corroborate Nexford's contemporaneous objections to the surcharge invoices and to confirm the absence of any written waiver or consent. Okonkwo's testimony should establish that Nexford raised objections in real time, that Nexford did not waive the notic

XIII. Exhibits Referenced During Deposition The following exhibits were marked and used during the deposition of Natalie Gunderson on January 18, 2023. Copies of all exhibits are maintained in the C&H matter file and will be included in the exhibit binder for trial preparation purposes.

XIV. Distribution and Confidentiality This memorandum is protected by the attorney-client privilege and the work product doctrine. It has been prepared by counsel for Nexford Industrial Holdings Inc. in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel at Calderwood & Harkness LLP. It is intended solely for use by authorized recipients in connection w