1005-00003 · Calderwood & Harkness LLP · Pending Claims Interface

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ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606

Telephone: (312) 555-7800 Facsimile: (312) 555-7801 www.calderwoodharkness.com

May 25, 2022

VIA E-MAIL AND U.S. MAIL

Catherine Byrne, Esq. Partner Hollander Byrne & Strauss LLP 70 West Madison Street, Suite 3600 Chicago, Illinois 60602

Re: Coverage Coordination — Product-Liability Tower Nexford Industrial Holdings Inc. — Pending Claims Matter No. 1005-00003

Dear Ms. Byrne:

I write on behalf of our mutual client, Nexford Industrial Holdings Inc. ("Nexford" or "NIH"), a Delaware corporation headquartered at 2200 Corporate Center Drive, Suite 800, Schaumburg, Illinois 60173. As you are aware, Calderwood & Harkness LLP ("C&H") has been retained by Nexford under an engagement letter dated April 22, 2022, assigned Matter No. 1005-00003, to conduct a comprehensive review of Nexford's directors-and-officers and product-liability insurance towers in connection with the 2022–2023 renewal cycle. This engagement encompasses ongoing monitoring of tower erosion, analysis of coverage positions, coordination with Nexford's broker of record and insurers, and the preservation of Nexford's coverage rights under all applicable policies.

We understand that Hollander Byrne & Strauss LLP ("HBS") serves as Nexford's outside litigation counsel in two pending product-liability actions that directly implicate the product-liability insurance tower. The purpose of this letter is to establish clear and workable coordination protocols between C&H, in its capacity as coverage counsel, and HBS, in its capacity as claims and litigation counsel, in order to: (a) ensure full compliance with the policy obligations applicable to the pending claims; (b) preserve Nexford's coverage rights across the product-liability tower; and (c) enable proper, real-time monitoring of tower erosion as these claims progress through litigation.

This letter has been prepared at the direction of Priya Sundaram, General Counsel and Corporate Secretary of Nexford, and in coordination with Trevor Haines, Vice President of Risk Management, and Donna Kowalski, Director of Insurance and Claims. Ms. Sundaram, Mr. Haines, and Ms. Kowalski have each reviewed and approved the protocols set forth below and have authorized C&H to communicate them to HBS.

I. Identification of Pending Claims

For purposes of this letter and the coordination protocols described herein, the two pending product-liability actions implicating the Nexford product-liability tower are identified as follows.

A. Higgins v. Nexford Conveyor Systems, LLC et al.

This action was filed on September 14, 2021, in the Circuit Court of Will County, Illinois, and has been assigned Case No. 2021-L-04382. The plaintiff, Mr. Dale Higgins, alleges that he sustained catastrophic crush injuries as a result of a defective emergency stop mechanism on a Model NCS-7200 conveyor system manufactured and installed by Nexford Conveyor Systems, LLC at a grain processing facility operated by the plaintiff's employer. The plaintiff's complaint seeks compensatory damages in the amount of $14.5 million, inclusive of past and future medical expenses, lost wages and earning capacity, pain and suffering, and loss of normal life. We understand that the case is currently in active discovery, with fact depositions underway and expert disclosures anticipated later this year.

The named insured with respect to this action is Nexford Conveyor Systems, LLC ("NCS"), a Delaware limited liability company and wholly owned subsidiary of Nexford Industrial Holdings Inc. NCS maintains its principal place of business and manufacturing facility at 4500 Industrial Parkway, Joliet, Illinois 60436 (EIN: 83-2174651). NCS is a named insured under the Midland Casualty & Surety Company primary general-liability/product-liability policy described in Section III below.

B. Consolidated Builders Supply Co. v. Triton Fastener Corp.

This action was filed on November 2, 2021, in the United States District Court for the Northern District of Illinois, and has been assigned Case No. 1:21-cv-08914. The plaintiff, Consolidated Builders Supply Co., alleges that Grade 8 hex bolts manufactured by Triton Fastener Corp. failed under load during a commercial building project, causing a partial wall collapse. The complaint asserts claims for property damage and business interruption losses totaling approximately $6.8 million. We understand that the defendant's motion to dismiss was denied by the court on February 11, 2022, and the case is currently in active litigation.

The named insured with respect to this action is Triton Fastener Corp. ("Triton"), an Illinois corporation and wholly owned subsidiary of Nexford Industrial Holdings Inc. Triton maintains its principal place of business and manufacturing facility at 1010 Whitman Avenue, Rockford, Illinois 61101 (EIN: 36-4892103). Triton is likewise a named insured under the Midland Casualty primary policy referenced below.

C. Claims Context and Reserve Summary

In the aggregate, the combined damages sought across both pending actions total $21.3 million ($14.5 million in Higgins and $6.8 million in Consolidated Builders). As of April 2022, Nexford's total open product-liability reserves across these two claims stand at $8.3 million, as established under the Midland Casualty & Surety Company primary layer. This figure represents the combined case reserves set by Midland Casualty's claims department, inclusive of indemnity and defense cost allocations.

To provide broader context, we note that Nexford's five-year product-liability loss history reflects the following:

• Total PL claims reported (five-year period): 12

• Claims closed: 9 (total paid losses: $4.72 million)

• Claims currently open: 3 (reserves: $8.3 million)

• IBNR estimate: $2.1 million (as determined by Kessler Quinn Advisory Group in their most recent actuarial analysis)

• Total five-year incurred losses (paid + reserves + IBNR): $15.12 million

These figures are relevant to the tower erosion analysis and the renewal underwriting process, both of which are described in greater detail below.

II. Product-Liability Insurance Tower Structure

For HBS's reference and to facilitate effective coordination on coverage matters, we provide below a summary of the full product-liability insurance tower currently in force for the Nexford corporate family. This information is highly confidential, and we ask that HBS treat it accordingly, consistent with the confidentiality and privilege protocols set forth in Section VIII of this letter.

The total tower provides aggregate coverage of $75 million above the self-insured retention. The total annual premium across all layers is $2,642,900. The current policy period for the entire tower runs from July 1, 2021, through July 1, 2022. As discussed in Section VII below, the tower is currently in renewal marketing, with a renewal effective date of July 1, 2022.

The broker of record for the product-liability program is Ashford Breckinridge LLP, located at 321 South Plymouth Court, Suite 1500, Chicago, Illinois 60604. The primary broker contacts are Phillip Garza, Senior Vice President, Executive Risk Practice, and Tamara Fisk, Account Executive. All communications with carriers regarding the product-liability tower should be coordinated through Ashford Breckinridge, Nexford's risk management team, and C&H as appropriate.

III. Obligation to Cooperate with Midland Casualty as Primary Insurer

A. Duty to Cooperate

Under the Midland Casualty primary GL/PL policy (Policy No. MCS-GL-2021-55671), each insured — including NCS and Triton as named insured subsidiaries of Nexford — is subject to a comprehensive cooperation clause requiring full and timely cooperation with the insurer in the investigation, defense, and resolution of all covered claims. The cooperation clause, found at Section IV.B of the Midland Casualty policy form, broadly requires that the insured "cooperate with [the insurer] in the investigation, defense, or settlement of the claim or suit," and that the insured "assist [the insurer] upon [the insurer's] request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply."

HBS, as Nexford's outside litigation counsel directing the day-to-day defense of both the Higgins and Consolidated Builders actions, must ensure that all actions taken in the defense of these matters are fully consistent with this cooperation obligation. The duty of cooperation is a condition of coverage under the Midland Casualty policy, and any material breach of that duty could provide Midland Casualty with a basis to disclaim coverage or to assert a reservation of rights — an outcome that Nexford must avoid.

In practical terms, the duty to cooperate requires HBS to undertake, at a minimum, the following specific actions:

1. Respond promptly to insurer requests. HBS should respond to all reasonable requests from Midland Casualty for information, documents, and access to witnesses in a timely manner. Any request from Midland Casualty that HBS believes is overly broad, unduly burdensome, or raises privilege concerns should be brought to C&H's attention immediately so that we can evaluate the request and, if necessary, work with Midland Casualty to narrow its scope while preserving the cooperative relationship.

2. Coordinate discovery strategy. HBS should coordinate its discovery strategy in each action with Midland Casualty's designated claims adjuster. We understand that the current claims adjuster assigned to the Nexford account at Midland Casualty is [to be confirmed by Donna Kowalski]. While HBS retains professional independence in the conduct of the defense, it is essential that Midland Casualty be kept informed of significant discovery decisions, including the timing and scope of depositions, document productions, and expert discovery.

3. Provide material pleadings and orders. HBS should provide Midland Casualty with copies of all material pleadings, motions, and court orders contemporaneously with their filing or receipt. This includes, without limitation, complaints and amended complaints, answers, motions to dismiss and responses thereto, motions for summary judgment, discovery motions and rulings, scheduling orders, and any order setting or modifying trial dates. Copies of these materials should be transmitted to Midland Casualty's claims department and simultaneously provided to Donna Kowalski at Nexford.

B. Voluntary Payments and Admissions

We wish to draw particular attention to the voluntary payments and admissions provisions of the Midland Casualty policy. Under Section IV.C of the policy form, no insured shall, without the prior written consent of Midland Casualty:

(a) voluntarily make any payment, assume any obligation, or incur any expense, other than for first aid to others at the time of the occurrence;

(b) make any admission of liability or fault; or

Accordingly, HBS must not make any voluntary payment, assume any obligation, or admit liability on behalf of Nexford, NCS, or Triton without first obtaining prior written consent from Midland Casualty. Any action that could be construed as an admission of liability — whether formal or informal — risks jeopardizing coverage under the policy. This prohibition extends to informal statements made during discovery, at depositions, in court filings, or in communications with opposing counsel.

To the extent that HBS contemplates any proposed admissions of fact or stipulations in discovery or at trial that could bear on coverage or liability — including, for example, stipulations regarding the design specifications of the NCS-7200 conveyor system or the metallurgical composition and testing history of the Triton Grade 8 hex bolts — those proposed admissions or stipulations should be discussed with C&H and with Nexford's risk management team before they are submitted to the court or communicated to opposing counsel. C&H will evaluate whether any such admission or stipulation could create coverage issues and will coordinate with Midland Casualty as appropriate.

IV. Settlement Consent Requirements

Under the Midland Casualty primary policy, the insured may not settle any claim or suit without the insurer's prior written consent. This settlement consent provision is a standard and strictly enforced condition of coverage, and failure to comply with it could result in Midland Casualty disclaiming liability for any settlement amount.

We therefore request that HBS observe the following protocols with respect to settlement discussions in both the Higgins and Consolidated Builders matters:

1. No unauthorized settlement activity. HBS should not engage in settlement discussions, mediation, or negotiate any settlement terms — even on a preliminary, exploratory, or without-prejudice basis — without first notifying both Midland Casualty (through its designated claims adjuster) and Nexford's internal team (Trevor Haines and Donna Kowalski). This applies equally to formal and informal settlement overtures, whether initiated by HBS, by the plaintiff, or by the court.

2. Coordination with C&H on settlement authority. If settlement authority is sought from Nexford's board of directors, management, or any internal committee with authority to approve settlements, HBS should simultaneously coordinate with C&H so that the coverage implications of any proposed settlement can be fully evaluated. This includes an assessment of whether the proposed settlement amount, together with defense costs already incurred, would cause aggregate losses to approach or exceed the Midland Casualty primary aggregate limit.

3. Erosion into excess layers. For any settlement or combination of settlements that would cause aggregate paid losses (including defense costs) to exceed $10 million — thereby reaching the Great Basin Insurance Company 1st Excess/Umbrella layer at its $10 million attachment point — C&H must be consulted in advance so that proper notice can be given to all affected excess carriers. Failure to provide timely notice to excess carriers upon exhaustion of the primary layer could jeopardize coverage under the excess policies.

4. Varying consent requirements. HBS should be aware that the settlement consent requirements may differ across the excess layers of the tower. The Great Basin 1st Excess/Umbrella policy, the Cornerstone 2nd Excess policy, and the Allegheny Pacific 3rd Excess policy each contain their own settlement consent and cooperation provisions, which may impose different standards and procedures from those in the Midland Casualty primary policy. C&H will advise HBS on the specific requirements applicable to each excess carrier as and when those requirements become relevant, including in any circumstance where settlement discussions may implicate exposure above the primary layer.

V. Defense Cost Reporting Protocols

A. Reporting Obligation to Midland Casualty

A critical feature of the Midland Casualty primary GL/PL policy that must inform HBS's approach to both pending actions is that defense costs under the policy are included within the per-occurrence and aggregate limits. The Midland Casualty policy is not a "defense outside limits" policy; rather, all defense costs incurred in connection with covered claims erode the policy limits dollar for dollar. This means that every dollar spent on defense costs reduces the aggregate limit available for indemnity payments.

This structure makes accurate and timely reporting of defense costs not merely a matter of good practice, but a critical obligation. As cumulative defense expenditures in both Higgins and Consolidated Builders continue to accrue, they will progressively reduce the $10 million aggregate limit available under the Midland Casualty primary layer. When considered in conjunction with the current open reserves of $8.3 million, it is apparent that defense cost management is essential to the preservation of available aggregate capacity.

HBS should submit detailed fee invoices and disbursement reports to Midland Casualty's claims department in strict accordance with the insurer's billing guidelines. We understand that Midland Casualty has issued written litigation management guidelines applicable to outside counsel, and we request that HBS confirm that it has received and is complying with those guidelines. Copies of all invoices and disbursement reports submitted to Midland Casualty should simultaneously be provided to Donna Kowalski, Director of Insurance and Claims, at Nexford.

B. Internal Reporting to C&H and Nexford

In addition to the reporting obligations to Midland Casualty described above, HBS should provide C&H with quarterly summaries of defense costs incurred in each action. These summaries should be broken down by case, by attorney, and by cost category (e.g., attorney fees, expert fees, court reporter fees, travel, copying and production costs, and other disbursements). Each quarterly summary should include the following information:

(i) cumulative defense costs incurred to date in each case, from inception of the defense through the end of the applicable reporting quarter;

(ii) estimated defense costs for the next quarter, with a brief narrative explanation of the anticipated activities driving those costs (e.g., depositions, expert discovery, motion practice, mediation preparation); and

(iii) any significant upcoming expenditures that HBS anticipates in the near term, including but not limited to expert retention fees, major deposition costs, trial preparation expenses, and any other anticipated expenditures in excess of $25,000.

This information is essential for C&H's ongoing monitoring of tower erosion. As noted above, the Midland Casualty primary aggregate limit is $10 million, current open reserves across both claims total $8.3 million, and defense costs erode those limits. The margin between current reserves and the primary aggregate is narrow, and accurate defense cost data is necessary for C&H to model erosion scenarios and to advise Nexford on the timing of notice obligations to excess carriers.

C&H's working associate on this matter, Yuki Nakamura (Calderwood & Harkness LLP, Chicago office), is coordinating the defense cost erosion tracking analysis. Ms. Nakamura may contact HBS directly with requests for specific cost data, invoices, or clarifications. We ask that HBS respond to Ms. Nakamura's requests promptly and treat them with the same priority as requests from the undersigned.

The first quarterly report under this protocol should cover the period through June 30, 2022, and should be submitted to C&H and Nexford no later than July 15, 2022.

C. Impact on Tower Erosion

Given the current $8.3 million in open reserves and the ongoing accrual of defense costs within limits, C&H has concluded that there is a realistic and material prospect that the Midland Casualty primary aggregate ($10 million) could be exhausted during the current policy period or shortly thereafter, thereby triggering the Great Basin 1st Excess/Umbrella layer at its $10 million attachment point. The probability of primary-layer exhaustion increases if either pending action results in an adverse verdict, if settlement demands exceed current reserve estimates, or if defense costs escalate due to prolonged discovery or motion practice.

In light of this risk, HBS should alert C&H immediately if defense costs or settlement developments in either the Higgins or Consolidated Builders action suggest that the primary aggregate will be breached. "Immediately" in this context means as soon as HBS becomes aware of any development — including receipt of a significant expert report, a change in settlement posture, or a cost overrun — that makes primary-layer exhaustion more likely.

Upon any exhaustion or anticipated exhaustion of the primary layer, notice obligations to excess carriers must be triggered promptly. C&H will coordinate the preparation and delivery of these notices in consultation with Ashford Breckinridge, the broker of record. HBS's timely communication of cost and exposure data is essential to ensuring that these notice obligations are met and that excess coverage is not jeopardized.

VI. Duty to Notify C&H of Material Developments Affecting Tower Erosion

A. Material Developments Requiring Notification

Beyond the specific defense cost reporting protocols described above, HBS should promptly notify C&H of any material development in either the Higgins or Consolidated Builders action that could affect the product-liability tower, the coverage analysis, or Nexford's overall exposure. Notifications under this section should be directed to Douglas Fairchild and Naomi Petersen, Lead Associate, at C&H (contact information provided in Section IX below).

Material developments requiring notification include, but are not limited to, the following:

(a) Any increase in the amount of claimed damages, whether by amendment of the complaint, supplemental damage disclosures, or otherwise, or the addition of new damage theories not previously asserted.

(b) The joinder of additional parties, whether as plaintiffs, defendants, or third-party defendants, or the assertion of cross-claims or counterclaims that could expand Nexford's exposure or alter the allocation of liability among the parties.

(c) Findings or rulings on dispositive motions, including motions for summary judgment, motions to strike expert testimony (Daubert/Frye challenges), and motions for judgment on the pleadings. Both favorable and adverse rulings should be reported, as each may have implications for the coverage and erosion analysis.

(d) The discovery of additional product defects, manufacturing irregularities, or product failures — whether in the Model NCS-7200 conveyor system, the Triton Grade 8 hex bolts, or any other Nexford product — that could give rise to new claims, increase exposure on existing claims, or require separate notices under the product-liability tower.

(e) Any third-party claims, contribution claims, or indemnity demands involving Nexford subsidiaries against each other, or involving third parties against Nexford subsidiaries. Such claims are relevant to the cross-liability and severability provisions of the product-liability tower and may require separate coverage analysis.

(f) Any demand, motion, or court order relating to settlement conferences, mediations, or other alternative dispute resolution proceedings, whether initiated by the court, by opposing counsel, or by any party.

(g) Any governmental or regulatory investigation arising out of the subject incidents, including but not limited to investigations by the Occupational Safety and Health Administration ("OSHA"), the Consumer Product Safety Commission ("CPSC"), or any state regulatory authority. Such investigations may also trigger coverage considerations under Nexford's D&O insurance tower, which C&H is simultaneously reviewing.

(h) Expert reports or analyses quantifying damages in excess of current reserves, or identifying liability theories or causal mechanisms not previously anticipated in the defense strategy.

(i) Any change in trial date, the issuance of a trial-setting order, or the entry of any scheduling order that materially accelerates the litigation timeline.

(j) Any indication that opposing counsel intends to pursue punitive or exemplary damages, which may raise separate coverage issues under the product-liability tower.

B. Timing of Notification

Notification of any material development described above should be provided to C&H within two (2) business days of the occurrence of the development or HBS's receipt of information regarding the development, whichever is earlier. Notifications may be provided by email to Douglas Fairchild and Naomi Petersen at the addresses listed in Section IX.

For matters of particular urgency — including, without limitation, an imminent trial date, an unexpected adverse ruling, a significant increase in claimed damages, or the commencement of a governmental investigation — immediate telephone notification is requested, followed by written confirmation within twenty-four (24) hours. C&H will be available to discuss any such developments and to advise on coverage implications on an expedited basis.

VII. Coordination During the Renewal Period

C&H notes that the product-liability tower is currently in renewal marketing for the policy period commencing July 1, 2022. The broker submission was circulated by Ashford Breckinridge to the insurance market on May 3, 2022, and carrier quotes are expected to be received through June 8, 2022. The renewal effective date is July 1, 2022, and Nexford's risk management team expects to bind coverage no later than June 24, 2022, to allow adequate time for policy issuance.

HBS's cooperation is needed during this period to ensure that any information provided to carriers, underwriters, or brokers regarding the pending claims is accurate, complete, and fully consistent with court filings and current defense assessments. Inaccurate or inconsistent information provided during the renewal process could give rise to rescission, reformation, or coverage defense arguments by carriers in the renewed tower — an outcome that would be extremely detrimental to Nexford's interests.

Specifically, we request that HBS observe the following protocols during the renewal period:

1. Referral of carrier inquiries. If HBS is contacted directly by any carrier, underwriter, broker representative, or claims auditor regarding the pending claims, HBS should not provide substantive responses but should instead refer such inquiries to Donna Kowalski or Trevor Haines at Nexford, and should simultaneously notify C&H of the inquiry. This protocol is intended to ensure that all communications with the insurance market regarding the pending claims are centrally coordinated and consistent.

2. Case status information. C&H is analyzing the interaction of the pending claims with the renewal terms currently being negotiated, including prior-acts provisions, known-claims exclusions, and pending/prior-litigation exclusions. In connection with this analysis, C&H may request HBS's input on the current posture of each case, including factual and legal assessments, settlement exposure estimates, and anticipated litigation milestones. We ask that HBS provide this information promptly upon request.

3. Consistency with applications. To the extent that Nexford's renewal applications or broker submissions contain representations regarding the pending claims, HBS should review those representations upon request to confirm their accuracy and completeness. C&H will coordinate the review process with Ashford Breckinridge and Nexford's risk management team.

VIII. Confidentiality and Privilege

All communications between C&H and HBS regarding coverage matters, tower structure, tower erosion analysis, and related topics are intended to be, and shall be treated as, protected by the attorney-client privilege and/or the work-product doctrine. These communications are made for the purpose of rendering and obtaining legal advice on behalf of Nexford and its subsidiaries, and they reflect the mental impressions, conclusions, opinions, and legal theories of counsel.

In furtherance of this protection, we request that HBS observe the following protocols:

1. HBS should not disclose any coverage analysis, tower structure details, erosion projections, or C&H work product to Midland Casualty, Great Basin, Cornerstone, Allegheny Pacific, or any other carrier, underwriter, or broker, without prior written authorization from Nexford's General Counsel, Priya Sundaram, or from C&H. Unauthorized disclosure of coverage analysis to a carrier could waive the attorney-client privilege and could be used against Nexford in a future coverage dispute.

2. To the extent that HBS must communicate with Midland Casualty's claims personnel — as it must in the ordinary course of the defense — such communications should be limited to factual case updates, billing submissions, and consent requests. HBS should not disclose coverage opinions, coverage strategies, tower structure details, or any analysis prepared by C&H in any communication with Midland Casualty or its representatives.

3. All written communications between C&H and HBS regarding the matters addressed in this letter should bear the legend "Attorney-Client Privileged and Confidential / Attorney Work Product" and should be clearly identified as communications between counsel for Nexford.

4. HBS should maintain all documents and communications received from C&H in connection with the coverage coordination engagement in a manner that preserves their privileged and confidential status, separate from files that may be shared with or accessible to Midland Casualty or any other carrier.

IX. Contact Information and Logistics

For ease of reference and to facilitate efficient communication, we provide below the primary contact information for the C&H and Nexford teams working on this matter, and we request that HBS confirm the contact information for its team.

Calderwood & Harkness LLP:

Douglas Fairchild, Partner Real Estate Department — Insurance Coverage Practice 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Telephone: (312) 555-7812

Email: dfairchild@calderwoodharkness.com

Naomi Petersen, Lead Associate M&A Department — Coverage Coordination 600 Lexington Avenue, 30th Floor New York, New York 10022 Telephone: (212) 555-3447

Email: npetersen@calderwoodharkness.com

Yuki Nakamura, Associate Real Estate Department — Defense Cost Tracking & Erosion Analysis 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Telephone: (312) 555-7839

Email: ynakamura@calderwoodharkness.com

Nexford Industrial Holdings Inc.:

Priya Sundaram, General Counsel and Corporate Secretary 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173

Trevor Haines, Vice President, Risk Management 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173

Donna Kowalski, Director of Insurance and Claims 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173

Hollander Byrne & Strauss LLP (for C&H records — please confirm):

Catherine Byrne, Partner, Lead Trial Counsel 70 West Madison Street, Suite 3600 Chicago, Illinois 60602

Rafael Mendez, Senior Associate 70 West Madison Street, Suite 3600 Chicago, Illinois 60602

We respectfully request that HBS confirm receipt of this letter and acknowledge the coordination protocols set forth herein at your earliest convenience, but no later than June 3, 2022. A brief written acknowledgment by email to the undersigned will suffice. If HBS has any concerns about any of the protocols described in this letter, we are happy to discuss modifications that would be mutually acceptable while still protecting Nexford's coverage rights.

X. Closing

C&H looks forward to close and effective collaboration with HBS throughout the life of the pending product-liability claims, the current renewal cycle, and any future matters that may arise within the product-liability tower. We are confident that the coordination protocols outlined in this letter will serve Nexford's interests by ensuring that all coverage obligations are met, that tower erosion is monitored in real time, and that Nexford's coverage rights are preserved at every stage of the litigation and settlement process.

We sincerely appreciate HBS's anticipated cooperation in implementing these protocols. The effective management of the Higgins and Consolidated Builders matters — both as litigation matters and as coverage events — is of the highest priority to Nexford's leadership, and a coordinated approach between coverage counsel and litigation counsel is essential to achieving the best possible outcome for our mutual client.

We would like to schedule a brief coordination call during the week of May 30, 2022, to discuss any questions, practical implementation issues, or concerns that HBS may have regarding the protocols described in this letter. Please let us know your availability, and we will circulate a calendar invitation to include the relevant members of the C&H, HBS, and Nexford teams.

Thank you for your attention to this matter. Please do not hesitate to contact me directly if you have any questions in the interim.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Fairchild Partner Real Estate Department — Insurance Coverage Practice

cc: (via email)

Priya Sundaram, General Counsel and Corporate Secretary, Nexford Industrial Holdings Inc. Trevor Haines, Vice President, Risk Management, Nexford Industrial Holdings Inc. Donna Kowalski, Director of Insurance and Claims, Nexford Industrial Holdings Inc. Naomi Petersen, Lead Associate, Calderwood & Harkness LLP Yuki Nakamura, Associate, Calderwood & Harkness LLP

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter and all attachments and enclosures are protected by the attorney-client privilege and/or the work-product doctrine. This communication is intended solely for the use of the addressee and the individuals and entities copied hereon. If you have received this communication in error, please notify the sender immediately and destroy all copies. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.

Layer	Carrier	Domicile	Limits	Policy No.	SIR / Attachment	Annual Premium	Notes
Primary GL/PL	Midland Casualty & Surety Company	Illinois	$5M per occ. / $10M agg.	MCS-GL-2021-55671	$500,000 per occ. SIR	$1,125,000	Product recall sub-limit: $2.5M per occ. / $5M agg.
1st Excess / Umbrella	Great Basin Insurance Company	Nevada	$25M xs $10M	—	$10M attachment	$862,500	—
2nd Excess	Cornerstone Reinsurance Corp.	New York	$25M xs $35M	—	$35M attachment	$437,000	—
3rd Excess	Allegheny Pacific Underwriters, Inc.	California	$15M xs $60M	—	$60M attachment	$218,400	—

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606
Telephone: (312) 555-7800 Facsimile: (312) 555-7801 www.calderwoodharkness.com
May 25, 2022
VIA E-MAIL AND U.S. MAIL
Catherine Byrne, Esq. Partner Hollander Byrne & Strauss LLP 70 West Madison Street, Suite 3600 Chicago, Illinois 60602
Re: Coverage Coordination — Product-Liability Tower Nexford Industrial Holdings Inc. — Pending Claims Matter No. 1005-00003
Dear Ms. Byrne:
I write on behalf of our mutual client, Nexford Industrial Holdings Inc. ("Nexford" or "NIH"), a Delaware corporation headquartered at 2200 Corporate Center Drive, Suite 800, Schaumburg, Illinois 60173. As you are aware, Calderwood & Harkness LLP ("C&H") has been retained by Nexford under an engagement letter dated April 22, 2022, assigned Matter No. 1005-00003, to conduct a comprehensive review of Nexford's directors-and-officers and product-liability insurance towers in connection with the 2022–2023 renewal cycle. This engagement encompasses ongoing monitoring of tower erosion, analysis of coverage positions, coordination with Nexford's broker of record and insurers, and the preservation of Nexford's coverage rights under all applicable policies.
We understand that Hollander Byrne & Strauss LLP ("HBS") serves as Nexford's outside litigation counsel in two pending product-liability actions that directly implicate the product-liability insurance tower. The purpose of this letter is to establish clear and workable coordination protocols between C&H, in its capacity as coverage counsel, and HBS, in its capacity as claims and litigation counsel, in order to: (a) ensure full compliance with the policy obligations applicable to the pending claims; (b) preserve Nexford's coverage rights across the product-liability tower; and (c) enable proper, real-time monitoring of tower erosion as these claims progress through litigation.
This letter has been prepared at the direction of Priya Sundaram, General Counsel and Corporate Secretary of Nexford, and in coordination with Trevor Haines, Vice President of Risk Management, and Donna Kowalski, Director of Insurance and Claims. Ms. Sundaram, Mr. Haines, and Ms. Kowalski have each reviewed and approved the protocols set forth below and have authorized C&H to communicate them to HBS.
I. Identification of Pending Claims
For purposes of this letter and the coordination protocols described herein, the two pending product-liability actions implicating the Nexford product-liability tower are identified as follows.
A. Higgins v. Nexford Conveyor Systems, LLC et al.
This action was filed on September 14, 2021, in the Circuit Court of Will County, Illinois, and has been assigned Case No. 2021-L-04382. The plaintiff, Mr. Dale Higgins, alleges that he sustained catastrophic crush injuries as a result of a defective emergency stop mechanism on a Model NCS-7200 conveyor system manufactured and installed by Nexford Conveyor Systems, LLC at a grain processing facility operated by the plaintiff's employer. The plaintiff's complaint seeks compensatory damages in the amount of $14.5 million, inclusive of past and future medical expenses, lost wages and earning capacity, pain and suffering, and loss of normal life. We understand that the case is currently in active discovery, with fact depositions underway and expert disclosures anticipated later this year.
The named insured with respect to this action is Nexford Conveyor Systems, LLC ("NCS"), a Delaware limited liability company and wholly owned subsidiary of Nexford Industrial Holdings Inc. NCS maintains its principal place of business and manufacturing facility at 4500 Industrial Parkway, Joliet, Illinois 60436 (EIN: 83-2174651). NCS is a named insured under the Midland Casualty & Surety Company primary general-liability/product-liability policy described in Section III below.
B. Consolidated Builders Supply Co. v. Triton Fastener Corp.
This action was filed on November 2, 2021, in the United States District Court for the Northern District of Illinois, and has been assigned Case No. 1:21-cv-08914. The plaintiff, Consolidated Builders Supply Co., alleges that Grade 8 hex bolts manufactured by Triton Fastener Corp. failed under load during a commercial building project, causing a partial wall collapse. The complaint asserts claims for property damage and business interruption losses totaling approximately $6.8 million. We understand that the defendant's motion to dismiss was denied by the court on February 11, 2022, and the case is currently in active litigation.
The named insured with respect to this action is Triton Fastener Corp. ("Triton"), an Illinois corporation and wholly owned subsidiary of Nexford Industrial Holdings Inc. Triton maintains its principal place of business and manufacturing facility at 1010 Whitman Avenue, Rockford, Illinois 61101 (EIN: 36-4892103). Triton is likewise a named insured under the Midland Casualty primary policy referenced below.
C. Claims Context and Reserve Summary
In the aggregate, the combined damages sought across both pending actions total $21.3 million ($14.5 million in Higgins and $6.8 million in Consolidated Builders). As of April 2022, Nexford's total open product-liability reserves across these two claims stand at $8.3 million, as established under the Midland Casualty & Surety Company primary layer. This figure represents the combined case reserves set by Midland Casualty's claims department, inclusive of indemnity and defense cost allocations.
To provide broader context, we note that Nexford's five-year product-liability loss history reflects the following:
• Total PL claims reported (five-year period): 12
• Claims closed: 9 (total paid losses: $4.72 million)
• Claims currently open: 3 (reserves: $8.3 million)
• IBNR estimate: $2.1 million (as determined by Kessler Quinn Advisory Group in their most recent actuarial analysis)
• Total five-year incurred losses (paid + reserves + IBNR): $15.12 million
These figures are relevant to the tower erosion analysis and the renewal underwriting process, both of which are described in greater detail below.
II. Product-Liability Insurance Tower Structure
For HBS's reference and to facilitate effective coordination on coverage matters, we provide below a summary of the full product-liability insurance tower currently in force for the Nexford corporate family. This information is highly confidential, and we ask that HBS treat it accordingly, consistent with the confidentiality and privilege protocols set forth in Section VIII of this letter.
The total tower provides aggregate coverage of $75 million above the self-insured retention. The total annual premium across all layers is $2,642,900. The current policy period for the entire tower runs from July 1, 2021, through July 1, 2022. As discussed in Section VII below, the tower is currently in renewal marketing, with a renewal effective date of July 1, 2022.
The broker of record for the product-liability program is Ashford Breckinridge LLP, located at 321 South Plymouth Court, Suite 1500, Chicago, Illinois 60604. The primary broker contacts are Phillip Garza, Senior Vice President, Executive Risk Practice, and Tamara Fisk, Account Executive. All communications with carriers regarding the product-liability tower should be coordinated through Ashford Breckinridge, Nexford's risk management team, and C&H as appropriate.
III. Obligation to Cooperate with Midland Casualty as Primary Insurer
A. Duty to Cooperate
Under the Midland Casualty primary GL/PL policy (Policy No. MCS-GL-2021-55671), each insured — including NCS and Triton as named insured subsidiaries of Nexford — is subject to a comprehensive cooperation clause requiring full and timely cooperation with the insurer in the investigation, defense, and resolution of all covered claims. The cooperation clause, found at Section IV.B of the Midland Casualty policy form, broadly requires that the insured "cooperate with [the insurer] in the investigation, defense, or settlement of the claim or suit," and that the insured "assist [the insurer] upon [the insurer's] request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply."
HBS, as Nexford's outside litigation counsel directing the day-to-day defense of both the Higgins and Consolidated Builders actions, must ensure that all actions taken in the defense of these matters are fully consistent with this cooperation obligation. The duty of cooperation is a condition of coverage under the Midland Casualty policy, and any material breach of that duty could provide Midland Casualty with a basis to disclaim coverage or to assert a reservation of rights — an outcome that Nexford must avoid.
In practical terms, the duty to cooperate requires HBS to undertake, at a minimum, the following specific actions:
1. Respond promptly to insurer requests. HBS should respond to all reasonable requests from Midland Casualty for information, documents, and access to witnesses in a timely manner. Any request from Midland Casualty that HBS believes is overly broad, unduly burdensome, or raises privilege concerns should be brought to C&H's attention immediately so that we can evaluate the request and, if necessary, work with Midland Casualty to narrow its scope while preserving the cooperative relationship.
2. Coordinate discovery strategy. HBS should coordinate its discovery strategy in each action with Midland Casualty's designated claims adjuster. We understand that the current claims adjuster assigned to the Nexford account at Midland Casualty is [to be confirmed by Donna Kowalski]. While HBS retains professional independence in the conduct of the defense, it is essential that Midland Casualty be kept informed of significant discovery decisions, including the timing and scope of depositions, document productions, and expert discovery.
3. Provide material pleadings and orders. HBS should provide Midland Casualty with copies of all material pleadings, motions, and court orders contemporaneously with their filing or receipt. This includes, without limitation, complaints and amended complaints, answers, motions to dismiss and responses thereto, motions for summary judgment, discovery motions and rulings, scheduling orders, and any order setting or modifying trial dates. Copies of these materials should be transmitted to Midland Casualty's claims department and simultaneously provided to Donna Kowalski at Nexford.
B. Voluntary Payments and Admissions
We wish to draw particular attention to the voluntary payments and admissions provisions of the Midland Casualty policy. Under Section IV.C of the policy form, no insured shall, without the prior written consent of Midland Casualty:
(a) voluntarily make any payment, assume any obligation, or incur any expense, other than for first aid to others at the time of the occurrence;
(b) make any admission of liability or fault; or
(c) take any action that would prejudice the insurer's rights or increase the insurer's exposure under the policy.
Accordingly, HBS must not make any voluntary payment, assume any obligation, or admit liability on behalf of Nexford, NCS, or Triton without first obtaining prior written consent from Midland Casualty. Any action that could be construed as an admission of liability — whether formal or informal — risks jeopardizing coverage under the policy. This prohibition extends to informal statements made during discovery, at depositions, in court filings, or in communications with opposing counsel.
To the extent that HBS contemplates any proposed admissions of fact or stipulations in discovery or at trial that could bear on coverage or liability — including, for example, stipulations regarding the design specifications of the NCS-7200 conveyor system or the metallurgical composition and testing history of the Triton Grade 8 hex bolts — those proposed admissions or stipulations should be discussed with C&H and with Nexford's risk management team before they are submitted to the court or communicated to opposing counsel. C&H will evaluate whether any such admission or stipulation could create coverage issues and will coordinate with Midland Casualty as appropriate.
IV. Settlement Consent Requirements
Under the Midland Casualty primary policy, the insured may not settle any claim or suit without the insurer's prior written consent. This settlement consent provision is a standard and strictly enforced condition of coverage, and failure to comply with it could result in Midland Casualty disclaiming liability for any settlement amount.
We therefore request that HBS observe the following protocols with respect to settlement discussions in both the Higgins and Consolidated Builders matters:
1. No unauthorized settlement activity. HBS should not engage in settlement discussions, mediation, or negotiate any settlement terms — even on a preliminary, exploratory, or without-prejudice basis — without first notifying both Midland Casualty (through its designated claims adjuster) and Nexford's internal team (Trevor Haines and Donna Kowalski). This applies equally to formal and informal settlement overtures, whether initiated by HBS, by the plaintiff, or by the court.
2. Coordination with C&H on settlement authority. If settlement authority is sought from Nexford's board of directors, management, or any internal committee with authority to approve settlements, HBS should simultaneously coordinate with C&H so that the coverage implications of any proposed settlement can be fully evaluated. This includes an assessment of whether the proposed settlement amount, together with defense costs already incurred, would cause aggregate losses to approach or exceed the Midland Casualty primary aggregate limit.
3. Erosion into excess layers. For any settlement or combination of settlements that would cause aggregate paid losses (including defense costs) to exceed $10 million — thereby reaching the Great Basin Insurance Company 1st Excess/Umbrella layer at its $10 million attachment point — C&H must be consulted in advance so that proper notice can be given to all affected excess carriers. Failure to provide timely notice to excess carriers upon exhaustion of the primary layer could jeopardize coverage under the excess policies.
4. Varying consent requirements. HBS should be aware that the settlement consent requirements may differ across the excess layers of the tower. The Great Basin 1st Excess/Umbrella policy, the Cornerstone 2nd Excess policy, and the Allegheny Pacific 3rd Excess policy each contain their own settlement consent and cooperation provisions, which may impose different standards and procedures from those in the Midland Casualty primary policy. C&H will advise HBS on the specific requirements applicable to each excess carrier as and when those requirements become relevant, including in any circumstance where settlement discussions may implicate exposure above the primary layer.
V. Defense Cost Reporting Protocols
A. Reporting Obligation to Midland Casualty
A critical feature of the Midland Casualty primary GL/PL policy that must inform HBS's approach to both pending actions is that defense costs under the policy are included within the per-occurrence and aggregate limits. The Midland Casualty policy is not a "defense outside limits" policy; rather, all defense costs incurred in connection with covered claims erode the policy limits dollar for dollar. This means that every dollar spent on defense costs reduces the aggregate limit available for indemnity payments.
This structure makes accurate and timely reporting of defense costs not merely a matter of good practice, but a critical obligation. As cumulative defense expenditures in both Higgins and Consolidated Builders continue to accrue, they will progressively reduce the $10 million aggregate limit available under the Midland Casualty primary layer. When considered in conjunction with the current open reserves of $8.3 million, it is apparent that defense cost management is essential to the preservation of available aggregate capacity.
HBS should submit detailed fee invoices and disbursement reports to Midland Casualty's claims department in strict accordance with the insurer's billing guidelines. We understand that Midland Casualty has issued written litigation management guidelines applicable to outside counsel, and we request that HBS confirm that it has received and is complying with those guidelines. Copies of all invoices and disbursement reports submitted to Midland Casualty should simultaneously be provided to Donna Kowalski, Director of Insurance and Claims, at Nexford.
B. Internal Reporting to C&H and Nexford
In addition to the reporting obligations to Midland Casualty described above, HBS should provide C&H with quarterly summaries of defense costs incurred in each action. These summaries should be broken down by case, by attorney, and by cost category (e.g., attorney fees, expert fees, court reporter fees, travel, copying and production costs, and other disbursements). Each quarterly summary should include the following information:
(i) cumulative defense costs incurred to date in each case, from inception of the defense through the end of the applicable reporting quarter;
(ii) estimated defense costs for the next quarter, with a brief narrative explanation of the anticipated activities driving those costs (e.g., depositions, expert discovery, motion practice, mediation preparation); and
(iii) any significant upcoming expenditures that HBS anticipates in the near term, including but not limited to expert retention fees, major deposition costs, trial preparation expenses, and any other anticipated expenditures in excess of $25,000.
This information is essential for C&H's ongoing monitoring of tower erosion. As noted above, the Midland Casualty primary aggregate limit is $10 million, current open reserves across both claims total $8.3 million, and defense costs erode those limits. The margin between current reserves and the primary aggregate is narrow, and accurate defense cost data is necessary for C&H to model erosion scenarios and to advise Nexford on the timing of notice obligations to excess carriers.
C&H's working associate on this matter, Yuki Nakamura (Calderwood & Harkness LLP, Chicago office), is coordinating the defense cost erosion tracking analysis. Ms. Nakamura may contact HBS directly with requests for specific cost data, invoices, or clarifications. We ask that HBS respond to Ms. Nakamura's requests promptly and treat them with the same priority as requests from the undersigned.
The first quarterly report under this protocol should cover the period through June 30, 2022, and should be submitted to C&H and Nexford no later than July 15, 2022.
C. Impact on Tower Erosion
Given the current $8.3 million in open reserves and the ongoing accrual of defense costs within limits, C&H has concluded that there is a realistic and material prospect that the Midland Casualty primary aggregate ($10 million) could be exhausted during the current policy period or shortly thereafter, thereby triggering the Great Basin 1st Excess/Umbrella layer at its $10 million attachment point. The probability of primary-layer exhaustion increases if either pending action results in an adverse verdict, if settlement demands exceed current reserve estimates, or if defense costs escalate due to prolonged discovery or motion practice.
In light of this risk, HBS should alert C&H immediately if defense costs or settlement developments in either the Higgins or Consolidated Builders action suggest that the primary aggregate will be breached. "Immediately" in this context means as soon as HBS becomes aware of any development — including receipt of a significant expert report, a change in settlement posture, or a cost overrun — that makes primary-layer exhaustion more likely.
Upon any exhaustion or anticipated exhaustion of the primary layer, notice obligations to excess carriers must be triggered promptly. C&H will coordinate the preparation and delivery of these notices in consultation with Ashford Breckinridge, the broker of record. HBS's timely communication of cost and exposure data is essential to ensuring that these notice obligations are met and that excess coverage is not jeopardized.
VI. Duty to Notify C&H of Material Developments Affecting Tower Erosion
A. Material Developments Requiring Notification
Beyond the specific defense cost reporting protocols described above, HBS should promptly notify C&H of any material development in either the Higgins or Consolidated Builders action that could affect the product-liability tower, the coverage analysis, or Nexford's overall exposure. Notifications under this section should be directed to Douglas Fairchild and Naomi Petersen, Lead Associate, at C&H (contact information provided in Section IX below).
Material developments requiring notification include, but are not limited to, the following:
(a) Any increase in the amount of claimed damages, whether by amendment of the complaint, supplemental damage disclosures, or otherwise, or the addition of new damage theories not previously asserted.
(b) The joinder of additional parties, whether as plaintiffs, defendants, or third-party defendants, or the assertion of cross-claims or counterclaims that could expand Nexford's exposure or alter the allocation of liability among the parties.
(c) Findings or rulings on dispositive motions, including motions for summary judgment, motions to strike expert testimony (Daubert/Frye challenges), and motions for judgment on the pleadings. Both favorable and adverse rulings should be reported, as each may have implications for the coverage and erosion analysis.
(d) The discovery of additional product defects, manufacturing irregularities, or product failures — whether in the Model NCS-7200 conveyor system, the Triton Grade 8 hex bolts, or any other Nexford product — that could give rise to new claims, increase exposure on existing claims, or require separate notices under the product-liability tower.
(e) Any third-party claims, contribution claims, or indemnity demands involving Nexford subsidiaries against each other, or involving third parties against Nexford subsidiaries. Such claims are relevant to the cross-liability and severability provisions of the product-liability tower and may require separate coverage analysis.
(f) Any demand, motion, or court order relating to settlement conferences, mediations, or other alternative dispute resolution proceedings, whether initiated by the court, by opposing counsel, or by any party.
(g) Any governmental or regulatory investigation arising out of the subject incidents, including but not limited to investigations by the Occupational Safety and Health Administration ("OSHA"), the Consumer Product Safety Commission ("CPSC"), or any state regulatory authority. Such investigations may also trigger coverage considerations under Nexford's D&O insurance tower, which C&H is simultaneously reviewing.
(h) Expert reports or analyses quantifying damages in excess of current reserves, or identifying liability theories or causal mechanisms not previously anticipated in the defense strategy.
(i) Any change in trial date, the issuance of a trial-setting order, or the entry of any scheduling order that materially accelerates the litigation timeline.
(j) Any indication that opposing counsel intends to pursue punitive or exemplary damages, which may raise separate coverage issues under the product-liability tower.
B. Timing of Notification
Notification of any material development described above should be provided to C&H within two (2) business days of the occurrence of the development or HBS's receipt of information regarding the development, whichever is earlier. Notifications may be provided by email to Douglas Fairchild and Naomi Petersen at the addresses listed in Section IX.
For matters of particular urgency — including, without limitation, an imminent trial date, an unexpected adverse ruling, a significant increase in claimed damages, or the commencement of a governmental investigation — immediate telephone notification is requested, followed by written confirmation within twenty-four (24) hours. C&H will be available to discuss any such developments and to advise on coverage implications on an expedited basis.
VII. Coordination During the Renewal Period
C&H notes that the product-liability tower is currently in renewal marketing for the policy period commencing July 1, 2022. The broker submission was circulated by Ashford Breckinridge to the insurance market on May 3, 2022, and carrier quotes are expected to be received through June 8, 2022. The renewal effective date is July 1, 2022, and Nexford's risk management team expects to bind coverage no later than June 24, 2022, to allow adequate time for policy issuance.
HBS's cooperation is needed during this period to ensure that any information provided to carriers, underwriters, or brokers regarding the pending claims is accurate, complete, and fully consistent with court filings and current defense assessments. Inaccurate or inconsistent information provided during the renewal process could give rise to rescission, reformation, or coverage defense arguments by carriers in the renewed tower — an outcome that would be extremely detrimental to Nexford's interests.
Specifically, we request that HBS observe the following protocols during the renewal period:
1. Referral of carrier inquiries. If HBS is contacted directly by any carrier, underwriter, broker representative, or claims auditor regarding the pending claims, HBS should not provide substantive responses but should instead refer such inquiries to Donna Kowalski or Trevor Haines at Nexford, and should simultaneously notify C&H of the inquiry. This protocol is intended to ensure that all communications with the insurance market regarding the pending claims are centrally coordinated and consistent.
2. Case status information. C&H is analyzing the interaction of the pending claims with the renewal terms currently being negotiated, including prior-acts provisions, known-claims exclusions, and pending/prior-litigation exclusions. In connection with this analysis, C&H may request HBS's input on the current posture of each case, including factual and legal assessments, settlement exposure estimates, and anticipated litigation milestones. We ask that HBS provide this information promptly upon request.
3. Consistency with applications. To the extent that Nexford's renewal applications or broker submissions contain representations regarding the pending claims, HBS should review those representations upon request to confirm their accuracy and completeness. C&H will coordinate the review process with Ashford Breckinridge and Nexford's risk management team.
VIII. Confidentiality and Privilege
All communications between C&H and HBS regarding coverage matters, tower structure, tower erosion analysis, and related topics are intended to be, and shall be treated as, protected by the attorney-client privilege and/or the work-product doctrine. These communications are made for the purpose of rendering and obtaining legal advice on behalf of Nexford and its subsidiaries, and they reflect the mental impressions, conclusions, opinions, and legal theories of counsel.
In furtherance of this protection, we request that HBS observe the following protocols:
1. HBS should not disclose any coverage analysis, tower structure details, erosion projections, or C&H work product to Midland Casualty, Great Basin, Cornerstone, Allegheny Pacific, or any other carrier, underwriter, or broker, without prior written authorization from Nexford's General Counsel, Priya Sundaram, or from C&H. Unauthorized disclosure of coverage analysis to a carrier could waive the attorney-client privilege and could be used against Nexford in a future coverage dispute.
2. To the extent that HBS must communicate with Midland Casualty's claims personnel — as it must in the ordinary course of the defense — such communications should be limited to factual case updates, billing submissions, and consent requests. HBS should not disclose coverage opinions, coverage strategies, tower structure details, or any analysis prepared by C&H in any communication with Midland Casualty or its representatives.
3. All written communications between C&H and HBS regarding the matters addressed in this letter should bear the legend "Attorney-Client Privileged and Confidential / Attorney Work Product" and should be clearly identified as communications between counsel for Nexford.
4. HBS should maintain all documents and communications received from C&H in connection with the coverage coordination engagement in a manner that preserves their privileged and confidential status, separate from files that may be shared with or accessible to Midland Casualty or any other carrier.
IX. Contact Information and Logistics
For ease of reference and to facilitate efficient communication, we provide below the primary contact information for the C&H and Nexford teams working on this matter, and we request that HBS confirm the contact information for its team.
Calderwood & Harkness LLP:
Douglas Fairchild, Partner Real Estate Department — Insurance Coverage Practice 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Telephone: (312) 555-7812
Email: dfairchild@calderwoodharkness.com
Naomi Petersen, Lead Associate M&A Department — Coverage Coordination 600 Lexington Avenue, 30th Floor New York, New York 10022 Telephone: (212) 555-3447
Email: npetersen@calderwoodharkness.com
Yuki Nakamura, Associate Real Estate Department — Defense Cost Tracking & Erosion Analysis 155 North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Telephone: (312) 555-7839
Email: ynakamura@calderwoodharkness.com
Nexford Industrial Holdings Inc.:
Priya Sundaram, General Counsel and Corporate Secretary 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173
Trevor Haines, Vice President, Risk Management 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173
Donna Kowalski, Director of Insurance and Claims 2200 Corporate Center Drive, Suite 800 Schaumburg, Illinois 60173
Hollander Byrne & Strauss LLP (for C&H records — please confirm):
Catherine Byrne, Partner, Lead Trial Counsel 70 West Madison Street, Suite 3600 Chicago, Illinois 60602
Rafael Mendez, Senior Associate 70 West Madison Street, Suite 3600 Chicago, Illinois 60602
We respectfully request that HBS confirm receipt of this letter and acknowledge the coordination protocols set forth herein at your earliest convenience, but no later than June 3, 2022. A brief written acknowledgment by email to the undersigned will suffice. If HBS has any concerns about any of the protocols described in this letter, we are happy to discuss modifications that would be mutually acceptable while still protecting Nexford's coverage rights.
X. Closing
C&H looks forward to close and effective collaboration with HBS throughout the life of the pending product-liability claims, the current renewal cycle, and any future matters that may arise within the product-liability tower. We are confident that the coordination protocols outlined in this letter will serve Nexford's interests by ensuring that all coverage obligations are met, that tower erosion is monitored in real time, and that Nexford's coverage rights are preserved at every stage of the litigation and settlement process.
We sincerely appreciate HBS's anticipated cooperation in implementing these protocols. The effective management of the Higgins and Consolidated Builders matters — both as litigation matters and as coverage events — is of the highest priority to Nexford's leadership, and a coordinated approach between coverage counsel and litigation counsel is essential to achieving the best possible outcome for our mutual client.
We would like to schedule a brief coordination call during the week of May 30, 2022, to discuss any questions, practical implementation issues, or concerns that HBS may have regarding the protocols described in this letter. Please let us know your availability, and we will circulate a calendar invitation to include the relevant members of the C&H, HBS, and Nexford teams.
Thank you for your attention to this matter. Please do not hesitate to contact me directly if you have any questions in the interim.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Fairchild Partner Real Estate Department — Insurance Coverage Practice
cc: (via email)
Priya Sundaram, General Counsel and Corporate Secretary, Nexford Industrial Holdings Inc. Trevor Haines, Vice President, Risk Management, Nexford Industrial Holdings Inc. Donna Kowalski, Director of Insurance and Claims, Nexford Industrial Holdings Inc. Naomi Petersen, Lead Associate, Calderwood & Harkness LLP Yuki Nakamura, Associate, Calderwood & Harkness LLP
ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter and all attachments and enclosures are protected by the attorney-client privilege and/or the work-product doctrine. This communication is intended solely for the use of the addressee and the individuals and entities copied hereon. If you have received this communication in error, please notify the sender immediately and destroy all copies. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
Layer | Carrier | Domicile | Limits | Policy No. | SIR / Attachment | Annual Premium | Notes
Primary GL/PL | Midland Casualty & Surety Company | Illinois | $5M per occ. / $10M agg. | MCS-GL-2021-55671 | $500,000 per occ. SIR | $1,125,000 | Product recall sub-limit: $2.5M per occ. / $5M agg.
1st Excess / Umbrella | Great Basin Insurance Company | Nevada | $25M xs $10M | — | $10M attachment | $862,500 | —
2nd Excess | Cornerstone Reinsurance Corp. | New York | $25M xs $35M | — | $35M attachment | $437,000 | —
3rd Excess | Allegheny Pacific Underwriters, Inc. | California | $15M xs $60M | — | $60M attachment | $218,400 | —

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

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CALDERWOOD & HARKNESS LLP

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