1012-00003 · Stonefield Logistics Group · Analysis

ridgeline-forensic-engagement-letter.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law 700 Louisiana Street, Suite 4500 Houston, TX 77002 Telephone: (713) 555-8200 Facsimile: (713) 555-8201

February 12, 2024

VIA ELECTRONIC MAIL AND OVERNIGHT COURIER

Dr. William Creech, P.E., CFEI Lead Investigator Ridgeline Forensic Consultants LLC 9100 Sovereign Row, Suite 210 Dallas, TX 75247

Re: Engagement of Ridgeline Forensic Consultants LLC — Independent Origin-and-Cause Investigation of November 17, 2023 Fire at Warehouse Building C, 4501 East County Road 130, Midland, TX 79706

Calderwood & Harkness LLP Matter No. 1012-00003

Client: Stonefield Logistics Group Inc.

Dear Dr. Creech:

1. Introduction and Purpose of Engagement

Calderwood & Harkness LLP ("C&H" or the "Firm") writes on behalf of its client, Stonefield Logistics Group Inc. ("SLG" or the "Client"), a Texas corporation headquartered at 2900 Petroleum Tower Boulevard, Suite 400, Midland, TX 79701 (FEIN 84-3291057). This letter sets forth the terms and conditions under which C&H, acting as legal counsel for SLG, is retaining Ridgeline Forensic Consultants LLC ("Ridgeline" or "Consultant") to conduct an independent origin-and-cause investigation of a fire that occurred on November 17, 2023, at approximately 2:14 a.m. CST at SLG's transload facility, specifically Warehouse Building C, located at 4501 East County Road 130, Midland, TX 79706 (the "Midland Facility" or the "Loss Site").

By way of background, SLG is a mid-market intermodal freight brokerage, trucking, and transload/warehousing company operating fourteen (14) terminals across Texas, New Mexico, and Oklahoma, specializing in Permian Basin oilfield supply-chain logistics. SLG provides warehousing and transloading services for a range of oilfield service and supply companies, handling materials that include casing pipe, completion chemicals, downhole tools, and other equipment essential to exploration and production operations in the Permian Basin region.

The fire that is the subject of this engagement resulted in a total structural loss of Warehouse Building C and the destruction of approximately $4,780,000 in customer freight that was in SLG's care, custody, and control at the time of the loss. The circumstances surrounding the fire, and the adequacy of various fire-protection and suppression systems at the Midland Facility, are central to an insurance coverage dispute that has arisen between SLG and its all-risk inland marine and cargo legal liability insurer, Meridian Surety & Indemnity Company ("Meridian").

SLG maintained with Meridian an inland marine cargo legal liability policy, Policy No. IML-TX-0039821-2023, with a per-occurrence limit of $5,000,000 and a self-insured retention of $250,000. Following the November 17, 2023 fire, SLG timely submitted a claim to Meridian. After initially issuing a reservation of rights letter dated December 4, 2023, Meridian denied coverage by letter dated January 22, 2024. Meridian's denial invoked two policy exclusions: Exclusion 4(f), which pertains to losses arising from "Improper Storage" of cargo, and Exclusion 4(k), which pertains to losses arising from "Failure to Maintain" the insured facility or its fire-protection systems.

C&H has been retained by SLG to evaluate and pursue SLG's rights under the Meridian policy and to prepare for anticipated litigation or alternative dispute resolution proceedings. As part of that representation, C&H has determined that an independent, technically rigorous forensic investigation of the fire's origin and cause — as well as an evaluation of the fire-protection systems and storage practices at the Midland Facility — is essential to the development of SLG's legal position.

The primary contact at C&H for this engagement is Andrew Fitzpatrick, Lead Associate. Howard Bellamy is the Responsible Partner overseeing this matter. All substantive communications and deliverables should be directed to Mr. Fitzpatrick unless otherwise instructed.

2. Privileged Nature of the Engagement

Ridgeline is being retained by C&H, as legal counsel for SLG, for the express purpose of providing expert consulting services in connection with anticipated or pending litigation and/or an insurance coverage dispute between SLG and Meridian Surety & Indemnity Company. The retention of Ridgeline is made at the direction of legal counsel and is integral to counsel's ability to render legal advice and to prepare for potential adversarial proceedings.

Accordingly, all communications between Ridgeline and C&H — whether oral, written, or electronic — and all reports, analyses, notes, drafts, data, memoranda, working papers, test results, photographs, diagrams, and any other work product generated by Ridgeline in the course of this engagement, are intended to be protected by the attorney-client privilege and the work-product doctrine. Ridgeline acknowledges and agrees that these protections are held by SLG as the client of C&H and may only be waived by SLG, upon the advice of C&H.

Ridgeline shall not disclose any information, findings, opinions, conclusions, or any other aspect of its investigation or work product to any third party — including but not limited to Meridian Surety & Indemnity Company, its claims adjusters (specifically Patricia Ng, VP of Claims, and Brian Woolf, Senior Claims Examiner), its coverage counsel Kessler, Brandt & Howe LLP, SLG's insurance broker Calvert & Strauss Insurance Brokers, Inc., the Midland Fire Department, any shipper whose cargo was destroyed in the fire, any subcontractor not previously approved by C&H, or any other entity or individual — without the prior written authorization of C&H. This prohibition extends to informal or preliminary communications of any kind, whether in person, by telephone, by email, or otherwise.

All written deliverables prepared by Ridgeline pursuant to this engagement shall be addressed to Andrew Fitzpatrick at C&H and shall be prominently marked on each page with the following legend:

"PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT"

In the event that Ridgeline receives any subpoena, court order, discovery request, regulatory demand, or any other formal or informal request for documents, data, or testimony related to this engagement — from any source whatsoever — Ridgeline shall immediately notify C&H before producing any materials, responding to any inquiry, or providing any testimony. Ridgeline shall cooperate fully with C&H in asserting any applicable privileges or protections. Ridgeline shall not unilaterally produce documents or provide testimony without C&H's prior written consent.

3. Scope of Services

The scope of Ridgeline's engagement encompasses the following categories of investigation, analysis, and evaluation. Ridgeline shall exercise its independent professional judgment in conducting the investigation and forming its opinions, and shall follow generally accepted forensic investigation methodologies throughout.

3.1 Fire Origin-and-Cause Analysis

Ridgeline shall conduct a comprehensive origin-and-cause investigation of the November 17, 2023 fire at Warehouse Building C in accordance with NFPA 921, Guide for Fire and Explosion Investigations (current edition). The investigation shall employ the scientific method as described in NFPA 921, including systematic data collection, analysis of fire patterns, development and testing of hypotheses, and the elimination of potential causes that are not consistent with the physical evidence.

As part of the origin-and-cause analysis, Ridgeline shall perform a site inspection of the Loss Site at 4501 East County Road 130, Midland, TX 79706, including a thorough physical examination of the fire debris field, burn patterns, char depth, structural remains of Warehouse Building C, and all relevant mechanical, electrical, and process equipment within the fire-damaged area. Ridgeline shall document the site inspection through detailed photography, measurements, and field notes.

Ridgeline shall also review all available documentation pertinent to the fire, including but not limited to: Midland Fire Department incident reports and any supplemental investigative reports; the fire investigator's preliminary report (if available); SLG facility records; pre-fire and post-fire photographs and video footage from any source, including security cameras, first-responder body cameras, or aerial/drone imagery; witness statements from SLG employees, first responders, or other individuals with knowledge of the fire or the conditions at the Midland Facility; and any other materials provided by C&H pursuant to Section 6 of this letter.

Based on the totality of the evidence, Ridgeline shall determine the area of fire origin within Warehouse Building C and shall identify and opine upon the cause of ignition, including the first fuel ignited and the ignition source.

3.2 Electrical Panel Evaluation

Ridgeline shall conduct a detailed examination and analysis of the Warehouse Building C main electrical distribution panel, identified as a Square D Model QED-2, which was installed in 2011 as part of the original construction of Warehouse Building C. This examination shall include, to the extent the physical evidence permits, a component-level inspection of the panel's interior, including bus bars, circuit breakers, wiring connections, and conductor insulation.

Ridgeline shall evaluate whether there is evidence of electrical arcing, overheating, insulation degradation or failure, loose connections, or other electrical faults that could constitute a potential ignition source for the November 17, 2023 fire. Ridgeline shall apply recognized forensic methodologies for distinguishing between electrical arcing that caused the fire and arcing that was caused by the fire (i.e., "victim arcing" versus "cause arcing").

In addition, Ridgeline shall assess whether the Square D Model QED-2 panel was installed, maintained, and operated in accordance with the applicable provisions of the National Electrical Code (NEC), including the edition in effect at the time of installation, as well as manufacturer specifications and recommended maintenance schedules for the panel. Ridgeline shall identify any deviations from code or manufacturer requirements and assess whether such deviations, if any, are relevant to the fire's origin or cause.

Ridgeline shall also examine the spatial relationship between the electrical panel and adjacent combustible materials — including combustible packaging, palletized freight, and other stored materials — and assess whether the proximity of combustible materials to the panel constituted a fire-spread pathway that contributed to the development or extension of the fire.

3.3 Sprinkler System Performance Assessment

Ridgeline shall evaluate the performance of the Warehouse Building C wet-pipe automatic sprinkler system during the November 17, 2023 fire. The sprinkler system was designed and installed in 2011 in compliance with NFPA 13, Standard for the Installation of Sprinkler Systems, as part of the original construction of Warehouse Building C.

Ridgeline shall determine, to the extent feasible based on the physical evidence and available records, the following: (a) whether the sprinkler system activated during the fire; (b) the approximate timing of sprinkler activation relative to the fire's development; (c) the number and location of sprinkler heads that activated; and (d) the extent and duration of water discharge from the system.

Ridgeline shall further assess whether the sprinkler system, had it operated at its full design parameters — including the design-basis water-supply pressure of 52 psi and the specified flow rates — could have prevented or materially reduced the progression of the fire and the resulting cargo loss. This assessment shall take into account the commodity classification of the stored freight, the storage height and arrangement, and the applicable design criteria under NFPA 13 for the hazard classification of the occupancy.

3.4 Municipal Water Pressure Analysis

Ridgeline shall analyze the municipal water-supply pressure available to the Midland Facility on the night of November 17, 2023. The adequacy of the water supply is a critical factor in evaluating the performance of the sprinkler system and, by extension, the extent of the cargo loss.

Ridgeline shall document the actual water pressure delivered to the sprinkler system during the fire event. Preliminary information available to C&H indicates that the water pressure at the sprinkler system riser was approximately 36 psi at the time of the fire. The design-basis pressure for the Warehouse Building C sprinkler system, as established at the time of installation in 2011, is 52 psi.

Ridgeline shall assess the impact of this water-pressure differential — 36 psi actual versus 52 psi design — on the suppression efficacy of the sprinkler system. Specifically, Ridgeline shall evaluate how the reduced water pressure affected the flow rate, spray pattern, and coverage area of the activated sprinkler heads, and whether the resulting water delivery was sufficient to control or suppress the fire given the fuel load and fire conditions present in Warehouse Building C.

Ridgeline shall determine whether the water-pressure deficit was a contributing factor in the fire's progression beyond the area of origin and in the resulting total structural loss and cargo destruction. In reaching this determination, Ridgeline shall consider the hydraulic calculations for the sprinkler system, the system's demand curve, and the available municipal supply curve, utilizing any pressure data and flow-test records available from the City of Midland or from SLG's own records.

Ridgeline shall further opine on whether a fully code-compliant and properly maintained sprinkler system, operating at the design-basis pressure of 52 psi, would have prevented the total loss of Warehouse Building C and the destruction of the stored cargo under the conditions present on November 17, 2023. This opinion is of particular significance to C&H's analysis of Meridian's Exclusion 4(k) defense.

3.5 Storage Configuration Review

Ridgeline shall review and document the cargo storage configuration in Warehouse Building C at the time of the November 17, 2023 fire. This review shall include an assessment of the layout of storage bays within the warehouse, the types and quantities of freight stored in each bay, the stacking heights and configurations of palletized and racked materials, and the spacing between stored commodities.

As a reference point, C&H will provide Ridgeline with SLG's Warehouse Layout Plan Rev. 7, dated June 2023 (the "Layout Plan"). The Layout Plan designates the following storage arrangement for Warehouse Building C: pipe storage in Bays 1 through 4; tools and equipment in Bays 5 through 8; and chemical pallets in Bays 9 through 12. The Layout Plan further specifies a 40-foot buffer zone separating pipe storage areas from chemical storage areas.

Ridgeline shall conduct post-fire forensic mapping of the warehouse debris field to confirm or refute whether the actual storage configuration at the time of the fire was consistent with the Layout Plan. This mapping shall include, to the extent the evidence allows, identification of the pre-fire locations of the major cargo categories (pipe, tools/equipment, and chemicals) based on the physical evidence, burn patterns, and the distribution of debris and residual materials.

Ridgeline shall identify whether the storage arrangement in Warehouse Building C at the time of the fire complied with applicable industry standards, regulations, and shipper instructions. In particular, Ridgeline shall evaluate compliance with OSHA 29 CFR 1910.106, Flammable Liquids, with specific attention to the classification of the Cantera Chemical Supply Co. chemicals. It is C&H's preliminary understanding that the Cantera chemicals are classified as Class IIIB combustible liquids, with a flash point in excess of 200°F. Ridgeline shall assess whether the segregation and storage requirements under 29 CFR 1910.106 apply to Class IIIB combustible liquids under the conditions present in Warehouse Building C, and whether the storage arrangement — including the 40-foot buffer zone — satisfied any applicable segregation requirements. This analysis is of direct relevance to C&H's evaluation of Meridian's Exclusion 4(f) defense.

4. Deliverables

Ridgeline shall provide the following deliverables in connection with this engagement:

4.1 Forensic Report. Ridgeline shall prepare and deliver a comprehensive written forensic report (the "Report") setting forth Ridgeline's findings, analysis, opinions, and conclusions regarding each element of the Scope of Services described in Section 3 above. The Report shall address, at a minimum, the fire origin-and-cause analysis (Section 3.1), the electrical panel evaluation (Section 3.2), the sprinkler system performance assessment (Section 3.3), the municipal water pressure analysis (Section 3.4), and the storage configuration review (Section 3.5). The Report shall present Ridgeline's opinions to a reasonable degree of engineering and scientific certainty.

4.2 Supporting Materials. The Report shall include supporting photographs, diagrams, schematics, technical data, calculations, and any other illustrative materials necessary to explain and substantiate Ridgeline's findings and opinions. All photographs shall be keyed to a site plan or floor plan of Warehouse Building C, and all technical data shall be accompanied by appropriate references and citations.

4.3 Delivery Schedule. The Report shall be delivered to Andrew Fitzpatrick at C&H no later than thirty (30) calendar days from the date of the initial site inspection at the Loss Site. Based on the current anticipated schedule for the site inspection, the target delivery date for the final Report is on or before March 15, 2024. If Ridgeline anticipates any delay in meeting this deadline, Ridgeline shall notify C&H promptly and in writing.

4.4 Draft Review. Prior to finalization, Ridgeline shall circulate a draft of the Report to C&H for review and comment. C&H's review is intended to ensure the completeness and clarity of the Report and to identify any areas where additional analysis or explanation may be warranted. C&H will endeavor to return comments within five (5) business days of receiving the draft. Ridgeline retains full independence over the substance and conclusions of its work product; C&H's review shall not be understood to direct or influence Ridgeline's professional opinions.

4.5 Consultation. Ridgeline shall be available to confer with C&H counsel by telephone or video conference as reasonably necessary during the course of the investigation and the preparation of the Report. Ridgeline shall promptly advise C&H of any significant preliminary findings or developments that arise during the investigation.

4.6 Testimony. If requested by C&H, Ridgeline shall be available to provide deposition testimony, trial testimony, or testimony at any arbitration, mediation, or other proceeding in any subsequent litigation or dispute resolution process arising from this matter. Any testimony services would be governed by a separate engagement supplement and fee schedule to be negotiated and executed by the parties at such time as testimony is anticipated.

5. Compensation and Payment Terms

5.1 Fixed Fee. This engagement shall be performed on a fixed-fee basis. The total fixed fee for all services described in Section 3 (Scope of Services) and the deliverables described in Section 4 (Deliverables) is Thirty-Eight Thousand Five Hundred Dollars ($38,500.00).

5.2 Included Services and Expenses. The fixed fee includes all professional time of Dr. William Creech, P.E., CFEI, and any supporting Ridgeline staff assigned to the engagement, including but not limited to associate investigators, technicians, and administrative personnel. The fixed fee also includes one (1) site inspection visit to the Loss Site in Midland, TX, together with all travel expenses associated with that initial site inspection, including airfare or mileage (at the current IRS standard mileage rate), lodging, meals, and incidental travel expenses.

5.3 Additional Site Inspections. If additional site inspections beyond the initial visit are required in the professional judgment of Ridgeline or at the request of C&H, such additional visits will be billed at actual cost plus a ten percent (10%) administrative fee. No additional site inspection shall be undertaken without the prior written approval of C&H, which approval shall include an estimated cost for the additional visit.

5.4 Payment Schedule. Payment of the fixed fee shall be made in two equal installments as follows:

(a) First Installment: Fifty percent (50%) of the fixed fee, in the amount of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00), shall be due and payable upon execution of this engagement letter by both parties.

(b) Second Installment: The remaining fifty percent (50%) of the fixed fee, in the amount of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00), shall be due and payable upon delivery of the final Report to C&H.

5.5 Invoicing. All invoices shall be directed to Andrew Fitzpatrick at Calderwood & Harkness LLP, 700 Louisiana Street, Suite 4500, Houston, TX 77002, and shall reference Matter No. 1012-00003. Invoices may be submitted in hard copy or by electronic mail to the email address provided by Mr. Fitzpatrick. Payment shall be made within thirty (30) days of receipt of each invoice.

5.6 Payment Obligation. C&H will advance payment on behalf of SLG. Ridgeline acknowledges and agrees that its contractual payment obligation runs to C&H, and Ridgeline shall look solely to C&H for payment under this engagement letter.

6. Background Information to Be Provided

C&H will make available to Ridgeline the following materials to support the investigation contemplated by this engagement letter. Ridgeline should direct any requests for additional materials or information to Andrew Fitzpatrick at C&H.

(a) Meridian Surety & Indemnity Company Reservation of Rights letter dated December 4, 2023;

(b) Meridian Surety & Indemnity Company coverage denial letter dated January 22, 2024;

(c) SLG sworn proof of loss prepared by Whitlock & Associates, Certified Public Accountants, P.C. (Sandra Whitlock, CPA, CFF), submitted to Meridian on February 1, 2024;

(d) Meridian Policy No. IML-TX-0039821-2023 (Inland Marine Cargo Legal Liability Policy), effective April 1, 2023 through March 31, 2024, including all endorsements, schedules, riders, and policy conditions;

(e) SLG Warehouse Layout Plan Rev. 7, dated June 2023;

(f) SLG facility maintenance records for Warehouse Building C, including quarterly visual sprinkler inspection records dated December 15, 2022; March 20, 2023; June 12, 2023; and September 8, 2023;

(g) Record of last annual full-flow sprinkler test, dated September 14, 2022, together with SLG's engagement letter to Lone Star Fire Protection Inc., dated August 28, 2023, scheduling the next full-flow test for November 20, 2023;

(h) Midland Fire Department incident report and any available photographs, video footage, or supplemental investigative documentation;

(i) Shipper instructions and safety data sheets (SDS) for cargo stored in Warehouse Building C at the time of the fire, including materials from Permian Wellhead Services LLC, Cantera Chemical Supply Co., and Triton Subsurface Technologies Inc.;

(j) Building C construction drawings and electrical drawings, including specifications for the Square D Model QED-2 main electrical distribution panel (installed 2011) and the wet-pipe automatic sprinkler system (NFPA 13 compliant at installation, 2011); and

(k) Municipal water-supply records and pressure data for the Midland Facility service area, including any available flow-test results, pressure logs, and correspondence with the City of Midland water utility.

C&H reserves the right to supplement the foregoing materials as additional documents become available during the course of the investigation. Ridgeline shall promptly notify C&H if, in its professional judgment, additional categories of information or documentation are needed to complete its investigation.

7. Key Cargo Details for Reference

The following is a brief summary of the cargo destroyed in the November 17, 2023 fire, provided for Ridgeline's reference in understanding the scope and nature of the loss:

The foregoing cargo valuation figures are derived from the sworn proof of loss prepared by Whitlock & Associates, Certified Public Accountants, P.C. It is noted for clarity that the cargo valuation itself is not within the scope of Ridgeline's engagement. These figures are provided solely for the purpose of context and to assist Ridgeline in understanding the magnitude of the loss and the relative significance of the various categories of stored freight.

8. Fire Timeline Summary for Reference

The following is a summary timeline of the key events on November 17, 2023, based on information currently available to C&H. This timeline is provided for Ridgeline's reference and is subject to revision as additional information is developed:

Approximately 2:14 a.m. CST — Fire detected and/or originated in Warehouse Building C at the Midland Facility. The precise mechanism of detection (alarm activation, visual observation, or other means) is to be confirmed during Ridgeline's investigation.

Approximately 2:14–2:31 a.m. CST — Wet-pipe automatic sprinkler system activated. However, municipal water-supply pressure at the sprinkler riser was approximately 36 psi, which is below the system's design-basis pressure of 52 psi. The reduced water pressure limited the suppression efficacy of the sprinkler system. The degree to which the sprinkler system controlled or failed to control the fire during this interval is a key issue for Ridgeline's investigation.

Approximately 2:31 a.m. CST — Midland Fire Department units arrived on scene at the Midland Facility.

Approximately 4:45 a.m. CST — Fire contained by Midland Fire Department.

Post-Fire — Warehouse Building C declared a total structural loss. All cargo stored within the building was destroyed or rendered a total loss.

9. Independence and Qualifications

Ridgeline represents and warrants that Dr. William Creech holds a current Professional Engineer (P.E.) license issued by the Texas Board of Professional Engineers and Land Surveyors, and is a Certified Fire and Explosion Investigator (CFEI) certified by the National Association of Fire Investigators (NAFI). Ridgeline further represents that Dr. Creech and any supporting personnel assigned to this engagement possess the education, training, and experience necessary to competently perform the services described herein.

Ridgeline represents and warrants that it has no prior or current business, financial, personal, or professional relationship with Meridian Surety & Indemnity Company, Kessler, Brandt & Howe LLP, or any party adverse to SLG in this matter that would compromise Ridgeline's independence, objectivity, or impartiality in conducting the investigation and forming its opinions. If at any time during the engagement Ridgeline becomes aware of any actual or potential conflict of interest, Ridgeline shall immediately disclose such conflict to C&H.

Ridgeline's investigation shall be conducted in accordance with NFPA 921, Guide for Fire and Explosion Investigations (current edition), and NFPA 1033, Standard for Professional Qualifications for Fire Investigator (current edition). Ridgeline shall adhere to the systematic, evidence-based methodology prescribed by NFPA 921 and shall form its opinions based solely on the evidence and applicable scientific principles.

10. Insurance and Indemnification

10.1 Professional Liability Insurance. Ridgeline shall maintain professional liability (errors and omissions) insurance with limits of not less than Two Million Dollars ($2,000,000) per claim and in the aggregate during the term of this engagement and for a period of not less than two (2) years following the termination or expiration of this engagement. Ridgeline shall provide C&H with a certificate of insurance evidencing such coverage upon request, and shall promptly notify C&H of any material change in, cancellation of, or failure to renew such coverage.

10.2 Mutual Indemnification. Each party (the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party and its officers, directors, members, managers, employees, and agents (collectively, the "Indemnified Parties") from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from (a) the Indemnifying Party's negligence or willful misconduct in connection with this engagement, or (b) any material breach by the Indemnifying Party of its obligations under this engagement letter. The foregoing indemnification obligations shall survive the termination or expiration of this engagement.

11. Term and Termination

11.1 Effective Date and Term. This engagement letter is effective as of the date of execution by both parties and shall continue in effect until the final Report is delivered to C&H and accepted, unless earlier terminated in accordance with this Section 11.

11.2 Termination. Either party may terminate this engagement upon ten (10) days' prior written notice to the other party. Notice of termination shall be delivered by email and overnight courier to the addresses set forth in this engagement letter.

11.3 Compensation Upon Termination. In the event of early termination by either party, Ridgeline shall be compensated on a pro-rata basis for work completed as of the effective date of termination. Ridgeline shall provide C&H with a written accounting of work performed and expenses incurred through the termination date within ten (10) days of the effective date of termination, and any amounts due shall be paid within thirty (30) days of receipt of such accounting.

11.4 Return of Materials. Upon termination or expiration of this engagement, all work product, reports, drafts, notes, data, photographs, test results, and other materials generated by Ridgeline in connection with this engagement, as well as all background materials provided by C&H pursuant to Section 6, shall be promptly returned or transmitted to C&H. Ridgeline shall not retain copies of any such materials without the prior written consent of C&H.

12. Governing Law

This engagement letter shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to this engagement letter shall be subject to the exclusive jurisdiction of the state and federal courts located in Harris County, Texas.

13. Acceptance and Execution

If the foregoing terms are acceptable, please countersign this letter in the space provided below and return one fully executed copy to Andrew Fitzpatrick at Calderwood & Harkness LLP, 700 Louisiana Street, Suite 4500, Houston, TX 77002. An executed copy may also be returned via electronic mail in PDF format, with the original to follow by overnight courier.

Upon execution of this engagement letter by both parties, the initial payment of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00) shall become due and payable in accordance with Section 5.4(a) above.

We look forward to working with you on this important matter and are confident that Ridgeline's expertise will be invaluable to SLG's position. Please do not hesitate to contact me with any questions regarding this engagement letter or the investigation.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Andrew Fitzpatrick

Title: Lead Associate

Calderwood & Harkness LLP 700 Louisiana Street, Suite 4500 Houston, TX 77002

On behalf of Stonefield Logistics Group Inc. Matter No. 1012-00003

ACKNOWLEDGMENT AND ACCEPTANCE

The undersigned, on behalf of Ridgeline Forensic Consultants LLC, hereby acknowledges receipt of this engagement letter, agrees to the terms and conditions set forth herein, and accepts the engagement described above.

RIDGELINE FORENSIC CONSULTANTS LLC

By: ________

Name: Dr. William Creech, P.E., CFEI

Title: Lead Investigator / Managing Member

Ridgeline Forensic Consultants LLC 9100 Sovereign Row, Suite 210 Dallas, TX 75247

Date: ________

cc: Howard Bellamy, Partner, Calderwood & Harkness LLP Dale Engstrom, VP of Risk Management, Stonefield Logistics Group Inc.

Cargo Description	Owner	Value
312 joints of 5-1/2" P-110 casing pipe	Permian Wellhead Services LLC	$1,842,000
47 pallets of completion chemicals	Cantera Chemical Supply Co.	$1,126,500
18 crates of downhole tools and sensors	Triton Subsurface Technologies Inc.	$987,000
Miscellaneous freight (multiple shippers)	Various	$824,500
Total Cargo Value	$4,780,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law 700 Louisiana Street, Suite 4500 Houston, TX 77002 Telephone: (713) 555-8200 Facsimile: (713) 555-8201
February 12, 2024
VIA ELECTRONIC MAIL AND OVERNIGHT COURIER
Dr. William Creech, P.E., CFEI Lead Investigator Ridgeline Forensic Consultants LLC 9100 Sovereign Row, Suite 210 Dallas, TX 75247
Re: Engagement of Ridgeline Forensic Consultants LLC — Independent Origin-and-Cause Investigation of November 17, 2023 Fire at Warehouse Building C, 4501 East County Road 130, Midland, TX 79706
Calderwood & Harkness LLP Matter No. 1012-00003
Client: Stonefield Logistics Group Inc.
Dear Dr. Creech:
1. Introduction and Purpose of Engagement
Calderwood & Harkness LLP ("C&H" or the "Firm") writes on behalf of its client, Stonefield Logistics Group Inc. ("SLG" or the "Client"), a Texas corporation headquartered at 2900 Petroleum Tower Boulevard, Suite 400, Midland, TX 79701 (FEIN 84-3291057). This letter sets forth the terms and conditions under which C&H, acting as legal counsel for SLG, is retaining Ridgeline Forensic Consultants LLC ("Ridgeline" or "Consultant") to conduct an independent origin-and-cause investigation of a fire that occurred on November 17, 2023, at approximately 2:14 a.m. CST at SLG's transload facility, specifically Warehouse Building C, located at 4501 East County Road 130, Midland, TX 79706 (the "Midland Facility" or the "Loss Site").
By way of background, SLG is a mid-market intermodal freight brokerage, trucking, and transload/warehousing company operating fourteen (14) terminals across Texas, New Mexico, and Oklahoma, specializing in Permian Basin oilfield supply-chain logistics. SLG provides warehousing and transloading services for a range of oilfield service and supply companies, handling materials that include casing pipe, completion chemicals, downhole tools, and other equipment essential to exploration and production operations in the Permian Basin region.
The fire that is the subject of this engagement resulted in a total structural loss of Warehouse Building C and the destruction of approximately $4,780,000 in customer freight that was in SLG's care, custody, and control at the time of the loss. The circumstances surrounding the fire, and the adequacy of various fire-protection and suppression systems at the Midland Facility, are central to an insurance coverage dispute that has arisen between SLG and its all-risk inland marine and cargo legal liability insurer, Meridian Surety & Indemnity Company ("Meridian").
SLG maintained with Meridian an inland marine cargo legal liability policy, Policy No. IML-TX-0039821-2023, with a per-occurrence limit of $5,000,000 and a self-insured retention of $250,000. Following the November 17, 2023 fire, SLG timely submitted a claim to Meridian. After initially issuing a reservation of rights letter dated December 4, 2023, Meridian denied coverage by letter dated January 22, 2024. Meridian's denial invoked two policy exclusions: Exclusion 4(f), which pertains to losses arising from "Improper Storage" of cargo, and Exclusion 4(k), which pertains to losses arising from "Failure to Maintain" the insured facility or its fire-protection systems.
C&H has been retained by SLG to evaluate and pursue SLG's rights under the Meridian policy and to prepare for anticipated litigation or alternative dispute resolution proceedings. As part of that representation, C&H has determined that an independent, technically rigorous forensic investigation of the fire's origin and cause — as well as an evaluation of the fire-protection systems and storage practices at the Midland Facility — is essential to the development of SLG's legal position.
The primary contact at C&H for this engagement is Andrew Fitzpatrick, Lead Associate. Howard Bellamy is the Responsible Partner overseeing this matter. All substantive communications and deliverables should be directed to Mr. Fitzpatrick unless otherwise instructed.
2. Privileged Nature of the Engagement
Ridgeline is being retained by C&H, as legal counsel for SLG, for the express purpose of providing expert consulting services in connection with anticipated or pending litigation and/or an insurance coverage dispute between SLG and Meridian Surety & Indemnity Company. The retention of Ridgeline is made at the direction of legal counsel and is integral to counsel's ability to render legal advice and to prepare for potential adversarial proceedings.
Accordingly, all communications between Ridgeline and C&H — whether oral, written, or electronic — and all reports, analyses, notes, drafts, data, memoranda, working papers, test results, photographs, diagrams, and any other work product generated by Ridgeline in the course of this engagement, are intended to be protected by the attorney-client privilege and the work-product doctrine. Ridgeline acknowledges and agrees that these protections are held by SLG as the client of C&H and may only be waived by SLG, upon the advice of C&H.
Ridgeline shall not disclose any information, findings, opinions, conclusions, or any other aspect of its investigation or work product to any third party — including but not limited to Meridian Surety & Indemnity Company, its claims adjusters (specifically Patricia Ng, VP of Claims, and Brian Woolf, Senior Claims Examiner), its coverage counsel Kessler, Brandt & Howe LLP, SLG's insurance broker Calvert & Strauss Insurance Brokers, Inc., the Midland Fire Department, any shipper whose cargo was destroyed in the fire, any subcontractor not previously approved by C&H, or any other entity or individual — without the prior written authorization of C&H. This prohibition extends to informal or preliminary communications of any kind, whether in person, by telephone, by email, or otherwise.
All written deliverables prepared by Ridgeline pursuant to this engagement shall be addressed to Andrew Fitzpatrick at C&H and shall be prominently marked on each page with the following legend:
"PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT"
In the event that Ridgeline receives any subpoena, court order, discovery request, regulatory demand, or any other formal or informal request for documents, data, or testimony related to this engagement — from any source whatsoever — Ridgeline shall immediately notify C&H before producing any materials, responding to any inquiry, or providing any testimony. Ridgeline shall cooperate fully with C&H in asserting any applicable privileges or protections. Ridgeline shall not unilaterally produce documents or provide testimony without C&H's prior written consent.
3. Scope of Services
The scope of Ridgeline's engagement encompasses the following categories of investigation, analysis, and evaluation. Ridgeline shall exercise its independent professional judgment in conducting the investigation and forming its opinions, and shall follow generally accepted forensic investigation methodologies throughout.
3.1 Fire Origin-and-Cause Analysis
Ridgeline shall conduct a comprehensive origin-and-cause investigation of the November 17, 2023 fire at Warehouse Building C in accordance with NFPA 921, Guide for Fire and Explosion Investigations (current edition). The investigation shall employ the scientific method as described in NFPA 921, including systematic data collection, analysis of fire patterns, development and testing of hypotheses, and the elimination of potential causes that are not consistent with the physical evidence.
As part of the origin-and-cause analysis, Ridgeline shall perform a site inspection of the Loss Site at 4501 East County Road 130, Midland, TX 79706, including a thorough physical examination of the fire debris field, burn patterns, char depth, structural remains of Warehouse Building C, and all relevant mechanical, electrical, and process equipment within the fire-damaged area. Ridgeline shall document the site inspection through detailed photography, measurements, and field notes.
Ridgeline shall also review all available documentation pertinent to the fire, including but not limited to: Midland Fire Department incident reports and any supplemental investigative reports; the fire investigator's preliminary report (if available); SLG facility records; pre-fire and post-fire photographs and video footage from any source, including security cameras, first-responder body cameras, or aerial/drone imagery; witness statements from SLG employees, first responders, or other individuals with knowledge of the fire or the conditions at the Midland Facility; and any other materials provided by C&H pursuant to Section 6 of this letter.
Based on the totality of the evidence, Ridgeline shall determine the area of fire origin within Warehouse Building C and shall identify and opine upon the cause of ignition, including the first fuel ignited and the ignition source.
3.2 Electrical Panel Evaluation
Ridgeline shall conduct a detailed examination and analysis of the Warehouse Building C main electrical distribution panel, identified as a Square D Model QED-2, which was installed in 2011 as part of the original construction of Warehouse Building C. This examination shall include, to the extent the physical evidence permits, a component-level inspection of the panel's interior, including bus bars, circuit breakers, wiring connections, and conductor insulation.
Ridgeline shall evaluate whether there is evidence of electrical arcing, overheating, insulation degradation or failure, loose connections, or other electrical faults that could constitute a potential ignition source for the November 17, 2023 fire. Ridgeline shall apply recognized forensic methodologies for distinguishing between electrical arcing that caused the fire and arcing that was caused by the fire (i.e., "victim arcing" versus "cause arcing").
In addition, Ridgeline shall assess whether the Square D Model QED-2 panel was installed, maintained, and operated in accordance with the applicable provisions of the National Electrical Code (NEC), including the edition in effect at the time of installation, as well as manufacturer specifications and recommended maintenance schedules for the panel. Ridgeline shall identify any deviations from code or manufacturer requirements and assess whether such deviations, if any, are relevant to the fire's origin or cause.
Ridgeline shall also examine the spatial relationship between the electrical panel and adjacent combustible materials — including combustible packaging, palletized freight, and other stored materials — and assess whether the proximity of combustible materials to the panel constituted a fire-spread pathway that contributed to the development or extension of the fire.
3.3 Sprinkler System Performance Assessment
Ridgeline shall evaluate the performance of the Warehouse Building C wet-pipe automatic sprinkler system during the November 17, 2023 fire. The sprinkler system was designed and installed in 2011 in compliance with NFPA 13, Standard for the Installation of Sprinkler Systems, as part of the original construction of Warehouse Building C.
Ridgeline shall determine, to the extent feasible based on the physical evidence and available records, the following: (a) whether the sprinkler system activated during the fire; (b) the approximate timing of sprinkler activation relative to the fire's development; (c) the number and location of sprinkler heads that activated; and (d) the extent and duration of water discharge from the system.
Ridgeline shall further assess whether the sprinkler system, had it operated at its full design parameters — including the design-basis water-supply pressure of 52 psi and the specified flow rates — could have prevented or materially reduced the progression of the fire and the resulting cargo loss. This assessment shall take into account the commodity classification of the stored freight, the storage height and arrangement, and the applicable design criteria under NFPA 13 for the hazard classification of the occupancy.
3.4 Municipal Water Pressure Analysis
Ridgeline shall analyze the municipal water-supply pressure available to the Midland Facility on the night of November 17, 2023. The adequacy of the water supply is a critical factor in evaluating the performance of the sprinkler system and, by extension, the extent of the cargo loss.
Ridgeline shall document the actual water pressure delivered to the sprinkler system during the fire event. Preliminary information available to C&H indicates that the water pressure at the sprinkler system riser was approximately 36 psi at the time of the fire. The design-basis pressure for the Warehouse Building C sprinkler system, as established at the time of installation in 2011, is 52 psi.
Ridgeline shall assess the impact of this water-pressure differential — 36 psi actual versus 52 psi design — on the suppression efficacy of the sprinkler system. Specifically, Ridgeline shall evaluate how the reduced water pressure affected the flow rate, spray pattern, and coverage area of the activated sprinkler heads, and whether the resulting water delivery was sufficient to control or suppress the fire given the fuel load and fire conditions present in Warehouse Building C.
Ridgeline shall determine whether the water-pressure deficit was a contributing factor in the fire's progression beyond the area of origin and in the resulting total structural loss and cargo destruction. In reaching this determination, Ridgeline shall consider the hydraulic calculations for the sprinkler system, the system's demand curve, and the available municipal supply curve, utilizing any pressure data and flow-test records available from the City of Midland or from SLG's own records.
Ridgeline shall further opine on whether a fully code-compliant and properly maintained sprinkler system, operating at the design-basis pressure of 52 psi, would have prevented the total loss of Warehouse Building C and the destruction of the stored cargo under the conditions present on November 17, 2023. This opinion is of particular significance to C&H's analysis of Meridian's Exclusion 4(k) defense.
3.5 Storage Configuration Review
Ridgeline shall review and document the cargo storage configuration in Warehouse Building C at the time of the November 17, 2023 fire. This review shall include an assessment of the layout of storage bays within the warehouse, the types and quantities of freight stored in each bay, the stacking heights and configurations of palletized and racked materials, and the spacing between stored commodities.
As a reference point, C&H will provide Ridgeline with SLG's Warehouse Layout Plan Rev. 7, dated June 2023 (the "Layout Plan"). The Layout Plan designates the following storage arrangement for Warehouse Building C: pipe storage in Bays 1 through 4; tools and equipment in Bays 5 through 8; and chemical pallets in Bays 9 through 12. The Layout Plan further specifies a 40-foot buffer zone separating pipe storage areas from chemical storage areas.
Ridgeline shall conduct post-fire forensic mapping of the warehouse debris field to confirm or refute whether the actual storage configuration at the time of the fire was consistent with the Layout Plan. This mapping shall include, to the extent the evidence allows, identification of the pre-fire locations of the major cargo categories (pipe, tools/equipment, and chemicals) based on the physical evidence, burn patterns, and the distribution of debris and residual materials.
Ridgeline shall identify whether the storage arrangement in Warehouse Building C at the time of the fire complied with applicable industry standards, regulations, and shipper instructions. In particular, Ridgeline shall evaluate compliance with OSHA 29 CFR 1910.106, Flammable Liquids, with specific attention to the classification of the Cantera Chemical Supply Co. chemicals. It is C&H's preliminary understanding that the Cantera chemicals are classified as Class IIIB combustible liquids, with a flash point in excess of 200°F. Ridgeline shall assess whether the segregation and storage requirements under 29 CFR 1910.106 apply to Class IIIB combustible liquids under the conditions present in Warehouse Building C, and whether the storage arrangement — including the 40-foot buffer zone — satisfied any applicable segregation requirements. This analysis is of direct relevance to C&H's evaluation of Meridian's Exclusion 4(f) defense.
4. Deliverables
Ridgeline shall provide the following deliverables in connection with this engagement:
4.1 Forensic Report. Ridgeline shall prepare and deliver a comprehensive written forensic report (the "Report") setting forth Ridgeline's findings, analysis, opinions, and conclusions regarding each element of the Scope of Services described in Section 3 above. The Report shall address, at a minimum, the fire origin-and-cause analysis (Section 3.1), the electrical panel evaluation (Section 3.2), the sprinkler system performance assessment (Section 3.3), the municipal water pressure analysis (Section 3.4), and the storage configuration review (Section 3.5). The Report shall present Ridgeline's opinions to a reasonable degree of engineering and scientific certainty.
4.2 Supporting Materials. The Report shall include supporting photographs, diagrams, schematics, technical data, calculations, and any other illustrative materials necessary to explain and substantiate Ridgeline's findings and opinions. All photographs shall be keyed to a site plan or floor plan of Warehouse Building C, and all technical data shall be accompanied by appropriate references and citations.
4.3 Delivery Schedule. The Report shall be delivered to Andrew Fitzpatrick at C&H no later than thirty (30) calendar days from the date of the initial site inspection at the Loss Site. Based on the current anticipated schedule for the site inspection, the target delivery date for the final Report is on or before March 15, 2024. If Ridgeline anticipates any delay in meeting this deadline, Ridgeline shall notify C&H promptly and in writing.
4.4 Draft Review. Prior to finalization, Ridgeline shall circulate a draft of the Report to C&H for review and comment. C&H's review is intended to ensure the completeness and clarity of the Report and to identify any areas where additional analysis or explanation may be warranted. C&H will endeavor to return comments within five (5) business days of receiving the draft. Ridgeline retains full independence over the substance and conclusions of its work product; C&H's review shall not be understood to direct or influence Ridgeline's professional opinions.
4.5 Consultation. Ridgeline shall be available to confer with C&H counsel by telephone or video conference as reasonably necessary during the course of the investigation and the preparation of the Report. Ridgeline shall promptly advise C&H of any significant preliminary findings or developments that arise during the investigation.
4.6 Testimony. If requested by C&H, Ridgeline shall be available to provide deposition testimony, trial testimony, or testimony at any arbitration, mediation, or other proceeding in any subsequent litigation or dispute resolution process arising from this matter. Any testimony services would be governed by a separate engagement supplement and fee schedule to be negotiated and executed by the parties at such time as testimony is anticipated.
5. Compensation and Payment Terms
5.1 Fixed Fee. This engagement shall be performed on a fixed-fee basis. The total fixed fee for all services described in Section 3 (Scope of Services) and the deliverables described in Section 4 (Deliverables) is Thirty-Eight Thousand Five Hundred Dollars ($38,500.00).
5.2 Included Services and Expenses. The fixed fee includes all professional time of Dr. William Creech, P.E., CFEI, and any supporting Ridgeline staff assigned to the engagement, including but not limited to associate investigators, technicians, and administrative personnel. The fixed fee also includes one (1) site inspection visit to the Loss Site in Midland, TX, together with all travel expenses associated with that initial site inspection, including airfare or mileage (at the current IRS standard mileage rate), lodging, meals, and incidental travel expenses.
5.3 Additional Site Inspections. If additional site inspections beyond the initial visit are required in the professional judgment of Ridgeline or at the request of C&H, such additional visits will be billed at actual cost plus a ten percent (10%) administrative fee. No additional site inspection shall be undertaken without the prior written approval of C&H, which approval shall include an estimated cost for the additional visit.
5.4 Payment Schedule. Payment of the fixed fee shall be made in two equal installments as follows:
(a) First Installment: Fifty percent (50%) of the fixed fee, in the amount of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00), shall be due and payable upon execution of this engagement letter by both parties.
(b) Second Installment: The remaining fifty percent (50%) of the fixed fee, in the amount of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00), shall be due and payable upon delivery of the final Report to C&H.
5.5 Invoicing. All invoices shall be directed to Andrew Fitzpatrick at Calderwood & Harkness LLP, 700 Louisiana Street, Suite 4500, Houston, TX 77002, and shall reference Matter No. 1012-00003. Invoices may be submitted in hard copy or by electronic mail to the email address provided by Mr. Fitzpatrick. Payment shall be made within thirty (30) days of receipt of each invoice.
5.6 Payment Obligation. C&H will advance payment on behalf of SLG. Ridgeline acknowledges and agrees that its contractual payment obligation runs to C&H, and Ridgeline shall look solely to C&H for payment under this engagement letter.
6. Background Information to Be Provided
C&H will make available to Ridgeline the following materials to support the investigation contemplated by this engagement letter. Ridgeline should direct any requests for additional materials or information to Andrew Fitzpatrick at C&H.
(a) Meridian Surety & Indemnity Company Reservation of Rights letter dated December 4, 2023;
(b) Meridian Surety & Indemnity Company coverage denial letter dated January 22, 2024;
(c) SLG sworn proof of loss prepared by Whitlock & Associates, Certified Public Accountants, P.C. (Sandra Whitlock, CPA, CFF), submitted to Meridian on February 1, 2024;
(d) Meridian Policy No. IML-TX-0039821-2023 (Inland Marine Cargo Legal Liability Policy), effective April 1, 2023 through March 31, 2024, including all endorsements, schedules, riders, and policy conditions;
(e) SLG Warehouse Layout Plan Rev. 7, dated June 2023;
(f) SLG facility maintenance records for Warehouse Building C, including quarterly visual sprinkler inspection records dated December 15, 2022; March 20, 2023; June 12, 2023; and September 8, 2023;
(g) Record of last annual full-flow sprinkler test, dated September 14, 2022, together with SLG's engagement letter to Lone Star Fire Protection Inc., dated August 28, 2023, scheduling the next full-flow test for November 20, 2023;
(h) Midland Fire Department incident report and any available photographs, video footage, or supplemental investigative documentation;
(i) Shipper instructions and safety data sheets (SDS) for cargo stored in Warehouse Building C at the time of the fire, including materials from Permian Wellhead Services LLC, Cantera Chemical Supply Co., and Triton Subsurface Technologies Inc.;
(j) Building C construction drawings and electrical drawings, including specifications for the Square D Model QED-2 main electrical distribution panel (installed 2011) and the wet-pipe automatic sprinkler system (NFPA 13 compliant at installation, 2011); and
(k) Municipal water-supply records and pressure data for the Midland Facility service area, including any available flow-test results, pressure logs, and correspondence with the City of Midland water utility.
C&H reserves the right to supplement the foregoing materials as additional documents become available during the course of the investigation. Ridgeline shall promptly notify C&H if, in its professional judgment, additional categories of information or documentation are needed to complete its investigation.
7. Key Cargo Details for Reference
The following is a brief summary of the cargo destroyed in the November 17, 2023 fire, provided for Ridgeline's reference in understanding the scope and nature of the loss:
The foregoing cargo valuation figures are derived from the sworn proof of loss prepared by Whitlock & Associates, Certified Public Accountants, P.C. It is noted for clarity that the cargo valuation itself is not within the scope of Ridgeline's engagement. These figures are provided solely for the purpose of context and to assist Ridgeline in understanding the magnitude of the loss and the relative significance of the various categories of stored freight.
8. Fire Timeline Summary for Reference
The following is a summary timeline of the key events on November 17, 2023, based on information currently available to C&H. This timeline is provided for Ridgeline's reference and is subject to revision as additional information is developed:
Approximately 2:14 a.m. CST — Fire detected and/or originated in Warehouse Building C at the Midland Facility. The precise mechanism of detection (alarm activation, visual observation, or other means) is to be confirmed during Ridgeline's investigation.
Approximately 2:14–2:31 a.m. CST — Wet-pipe automatic sprinkler system activated. However, municipal water-supply pressure at the sprinkler riser was approximately 36 psi, which is below the system's design-basis pressure of 52 psi. The reduced water pressure limited the suppression efficacy of the sprinkler system. The degree to which the sprinkler system controlled or failed to control the fire during this interval is a key issue for Ridgeline's investigation.
Approximately 2:31 a.m. CST — Midland Fire Department units arrived on scene at the Midland Facility.
Approximately 4:45 a.m. CST — Fire contained by Midland Fire Department.
Post-Fire — Warehouse Building C declared a total structural loss. All cargo stored within the building was destroyed or rendered a total loss.
9. Independence and Qualifications
Ridgeline represents and warrants that Dr. William Creech holds a current Professional Engineer (P.E.) license issued by the Texas Board of Professional Engineers and Land Surveyors, and is a Certified Fire and Explosion Investigator (CFEI) certified by the National Association of Fire Investigators (NAFI). Ridgeline further represents that Dr. Creech and any supporting personnel assigned to this engagement possess the education, training, and experience necessary to competently perform the services described herein.
Ridgeline represents and warrants that it has no prior or current business, financial, personal, or professional relationship with Meridian Surety & Indemnity Company, Kessler, Brandt & Howe LLP, or any party adverse to SLG in this matter that would compromise Ridgeline's independence, objectivity, or impartiality in conducting the investigation and forming its opinions. If at any time during the engagement Ridgeline becomes aware of any actual or potential conflict of interest, Ridgeline shall immediately disclose such conflict to C&H.
Ridgeline's investigation shall be conducted in accordance with NFPA 921, Guide for Fire and Explosion Investigations (current edition), and NFPA 1033, Standard for Professional Qualifications for Fire Investigator (current edition). Ridgeline shall adhere to the systematic, evidence-based methodology prescribed by NFPA 921 and shall form its opinions based solely on the evidence and applicable scientific principles.
10. Insurance and Indemnification
10.1 Professional Liability Insurance. Ridgeline shall maintain professional liability (errors and omissions) insurance with limits of not less than Two Million Dollars ($2,000,000) per claim and in the aggregate during the term of this engagement and for a period of not less than two (2) years following the termination or expiration of this engagement. Ridgeline shall provide C&H with a certificate of insurance evidencing such coverage upon request, and shall promptly notify C&H of any material change in, cancellation of, or failure to renew such coverage.
10.2 Mutual Indemnification. Each party (the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party and its officers, directors, members, managers, employees, and agents (collectively, the "Indemnified Parties") from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from (a) the Indemnifying Party's negligence or willful misconduct in connection with this engagement, or (b) any material breach by the Indemnifying Party of its obligations under this engagement letter. The foregoing indemnification obligations shall survive the termination or expiration of this engagement.
11. Term and Termination
11.1 Effective Date and Term. This engagement letter is effective as of the date of execution by both parties and shall continue in effect until the final Report is delivered to C&H and accepted, unless earlier terminated in accordance with this Section 11.
11.2 Termination. Either party may terminate this engagement upon ten (10) days' prior written notice to the other party. Notice of termination shall be delivered by email and overnight courier to the addresses set forth in this engagement letter.
11.3 Compensation Upon Termination. In the event of early termination by either party, Ridgeline shall be compensated on a pro-rata basis for work completed as of the effective date of termination. Ridgeline shall provide C&H with a written accounting of work performed and expenses incurred through the termination date within ten (10) days of the effective date of termination, and any amounts due shall be paid within thirty (30) days of receipt of such accounting.
11.4 Return of Materials. Upon termination or expiration of this engagement, all work product, reports, drafts, notes, data, photographs, test results, and other materials generated by Ridgeline in connection with this engagement, as well as all background materials provided by C&H pursuant to Section 6, shall be promptly returned or transmitted to C&H. Ridgeline shall not retain copies of any such materials without the prior written consent of C&H.
12. Governing Law
This engagement letter shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict-of-laws principles. Any dispute arising out of or relating to this engagement letter shall be subject to the exclusive jurisdiction of the state and federal courts located in Harris County, Texas.
13. Acceptance and Execution
If the foregoing terms are acceptable, please countersign this letter in the space provided below and return one fully executed copy to Andrew Fitzpatrick at Calderwood & Harkness LLP, 700 Louisiana Street, Suite 4500, Houston, TX 77002. An executed copy may also be returned via electronic mail in PDF format, with the original to follow by overnight courier.
Upon execution of this engagement letter by both parties, the initial payment of Nineteen Thousand Two Hundred Fifty Dollars ($19,250.00) shall become due and payable in accordance with Section 5.4(a) above.
We look forward to working with you on this important matter and are confident that Ridgeline's expertise will be invaluable to SLG's position. Please do not hesitate to contact me with any questions regarding this engagement letter or the investigation.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Andrew Fitzpatrick
Title: Lead Associate
Calderwood & Harkness LLP 700 Louisiana Street, Suite 4500 Houston, TX 77002
On behalf of Stonefield Logistics Group Inc. Matter No. 1012-00003
ACKNOWLEDGMENT AND ACCEPTANCE
The undersigned, on behalf of Ridgeline Forensic Consultants LLC, hereby acknowledges receipt of this engagement letter, agrees to the terms and conditions set forth herein, and accepts the engagement described above.
RIDGELINE FORENSIC CONSULTANTS LLC
By: ________
Name: Dr. William Creech, P.E., CFEI
Title: Lead Investigator / Managing Member
Ridgeline Forensic Consultants LLC 9100 Sovereign Row, Suite 210 Dallas, TX 75247
Date: ________
cc: Howard Bellamy, Partner, Calderwood & Harkness LLP Dale Engstrom, VP of Risk Management, Stonefield Logistics Group Inc.
Cargo Description | Owner | Value
312 joints of 5-1/2" P-110 casing pipe | Permian Wellhead Services LLC | $1,842,000
47 pallets of completion chemicals | Cantera Chemical Supply Co. | $1,126,500
18 crates of downhole tools and sensors | Triton Subsurface Technologies Inc. | $987,000
Miscellaneous freight (multiple shippers) | Various | $824,500
Total Cargo Value | $4,780,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

VIA ELECTRONIC MAIL AND OVERNIGHT COURIER

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGMENT AND ACCEPTANCE

RIDGELINE FORENSIC CONSULTANTS LLC

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