1005-00005 · Nexford Industrial Holdings · Correspondence/Client

status-report-q4-2022.docx DOCUMENT Litigation

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ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law 200 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 Telephone: (312) 555-7200 Facsimile: (312) 555-7201 www.calderwoodharkness.com

December 20, 2022

VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL

Deborah Whitfield, Esq. General Counsel Nexford Industrial Holdings Inc. 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085

Martin Schaeffer Chief Executive Officer Nexford Industrial Holdings Inc. 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085

Re: Quarterly Status Report — Q4 2022 Cardinal Peak Industries v. Nexford Industrial Holdings Inc. Case No. 2022-L-008471 Circuit Court of Cook County, Illinois County Department, Law Division Firm Matter No.: 1005-00005

cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP, 875 North Michigan Avenue, Suite 3600, Chicago, Illinois 60611 Douglas Carmichael, Billing Partner, Calderwood & Harkness LLP

Dear Deborah and Martin:

We write to provide you with a comprehensive quarterly update on the status of the litigation brought by Cardinal Peak Industries ("Cardinal Peak" or "CPI") against Nexford Industrial Holdings Inc. ("Nexford") in the Circuit Court of Cook County, Illinois, Case No. 2022-L-008471 (the "Litigation"). As you know, Calderwood & Harkness LLP was engaged to represent Nexford in this matter, and our engagement was formally opened on August 22, 2022. This letter covers all significant developments during the fourth quarter of 2022 — encompassing the period from October through December 2022 — together with a summary of the significant filings from the initial weeks of our engagement in September 2022, which were not previously covered in a formal written status report. This letter is intended to serve as a consolidated record of the progress made since the inception of the engagement.

We have organized this report into the following sections for your convenience: (I) Executive Summary; (II) Background and Case Overview; (III) Significant Litigation Developments; (IV) discovery Phase; (V) Expert Retention; (VI) Legal Research and Analysis; (VII) Assessment of Current Litigation Posture; (VIII) Budget and Fee Summary; (IX) Lender and Stakeholder Considerations; (X) Next Steps and Anticipated Q1 2023 Activity; and (XI) Closing. We encourage you to review each section carefully and to contact us with any questions.

I. Executive Summary

We are pleased to report that Calderwood & Harkness has successfully defended against Cardinal Peak's initial attempts to narrow Nexford's defenses and has secured a favorable procedural posture as the case enters the discovery phase. The key accomplishments during the period covered by this report are as follows:

• Answer and Affirmative Defenses Filed (September 19, 2022). We filed a comprehensive Answer and Affirmative Defenses on behalf of Nexford, denying liability on all three counts and asserting five affirmative defenses grounded in the express terms of the Master Supply Agreement between the parties.

• Counterclaim Filed (October 3, 2022). We filed a two-count Counterclaim on behalf of Nexford, asserting breach of contract by Cardinal Peak and seeking declaratory judgment clarifying Nexford's limited payment obligations under the Master Supply Agreement. This filing was a critical strategic step, placing Cardinal Peak on the defensive and strengthening Nexford's position in any future settlement negotiations.

• Motion to Dismiss Counterclaim Denied (November 14, 2022). Cardinal Peak's counsel moved to dismiss the Counterclaim, arguing it was duplicative and failed to state a viable claim for declaratory relief. We opposed the motion vigorously, and on November 14, 2022, the Court denied the motion in its entirety, confirming that Nexford's Counterclaim states distinct and viable claims for affirmative relief.

• Written discovery Commenced (December 5, 2022). On December 5, 2022, we served Nexford's First Set of Interrogatories and First Set of Requests for Production on Cardinal Peak, targeting the specific surcharge calculation methodology employed by Cardinal Peak, the timeliness of its Surcharge Notices, and the factual bases for each of its claims.

• Expert Retained (December 12, 2022). On December 12, 2022, we retained Meridian Bridge Consulting LLC, with Dr. Anita Rosenthal, CPA, ABV, serving as lead expert consultant, to analyze the disputed surcharge invoices and prepare expert testimony on damages.

As previously discussed, Cardinal Peak continues to claim $4.73 million in allegedly unpaid surcharges under the Master Supply Agreement (MSA-NIH-CPI-2020-001), which was executed on January 15, 2020 (the "MSA" or "Master Supply Agreement"). Nexford's position remains firm and well-supported by the contractual language: applying the three principal contractual defenses under MSA Section 7.4 — namely, the late Surcharge Notice defense, the methodology deviation defense, and the 12% surcharge cap defense — Nexford owes at most an additional $0.21 million beyond the $1.68 million already paid to Cardinal Peak during the disputed period. We remain confident in the strength of these defenses, which are discussed in detail below.

II. Background and Case Overview

For the benefit of the full record and to ensure all recipients of this letter have a complete understanding of the dispute, we provide the following summary of the case background.

The Complaint. On August 8, 2022, Cardinal Peak filed its Complaint in the Circuit Court of Cook County, Illinois, County Department, Law Division, asserting three causes of action against Nexford: (1) Breach of Contract; (2) Unjust Enrichment; and (3) Account Stated. The case was assigned Case No. 2022-L-008471 and is before the Honorable Judge Patricia Winslow in the Law Division.

Cardinal Peak's Allegations. The core of Cardinal Peak's claims is that Nexford improperly rejected or only partially paid raw-material surcharge invoices issued by Cardinal Peak over a fourteen-month period, from March 2021 through May 2022. Cardinal Peak alleges that during this period, it invoiced Nexford a total of $6.41 million in surcharges, of which Nexford paid only $1.68 million, leaving an alleged unpaid balance of $4.73 million. We note that the surcharges invoiced for April 2021 were paid in full by Nexford and are not in dispute; accordingly, the contested period comprises the remaining thirteen months of the fourteen-month invoicing period.

Cardinal Peak's Counsel. Cardinal Peak is represented by the law firm of Blackwood Stein & Associates LLP, based in Denver, Colorado. The lead partner on the matter is Garrett Blackwood, who is admitted pro hac vice in the Cook County Circuit Court, with Megan Hsu serving as the primary associate. We have found opposing counsel to be generally professional in their communications, though aggressive in their litigation posture.

The Master Supply Agreement. The dispute arises under the Master Supply Agreement (MSA-NIH-CPI-2020-001), which was executed by the parties on January 15, 2020, for a three-year term. Under the MSA, Cardinal Peak agreed to supply Nexford with hot-rolled coil ("HRC") at a base price of $620 per ton and cold-rolled coil ("CRC") at a base price of $740 per ton, with estimated annual volumes of approximately 18,000 tons of HRC and 6,500 tons of CRC. This represents an approximate annual spend under the MSA of $15.97 million, making the agreement a material commercial relationship for both parties.

The Surcharge Mechanism — MSA Section 7.4. Section 7.4 of the MSA establishes the mechanism by which Cardinal Peak may pass through increases in raw-material and energy costs to Nexford in the form of surcharges. This provision is the central contractual provision at issue in the Litigation. Importantly, Section 7.4 includes several conditions and limitations on Cardinal Peak's right to impose surcharges, which form the basis of Nexford's defenses. Specifically:

(a) Late Surcharge Notices (Section 7.4(a)). The MSA requires Cardinal Peak to deliver a written "Surcharge Notice" to Nexford within fifteen (15) business days following the end of each calendar month in which a surcharge is claimed. This notice requirement operates as a condition precedent to Cardinal Peak's right to collect the surcharge. Our analysis of Cardinal Peak's invoicing records and Nexford's correspondence files indicates that Cardinal Peak failed to deliver timely Surcharge Notices in seven (7) of the fourteen (14) disputed months. The surcharge amounts corresponding to these seven late-notice months total approximately $2.18 million. We contend that Cardinal Peak's failure to comply with the notice deadline waives or extinguishes its right to collect these surcharges.

(b) Methodology Deviation (Exhibit C — Surcharge Methodology). Exhibit C to the MSA prescribes the specific methodology Cardinal Peak must use to calculate surcharges. This methodology is tied to two published, independent indices: the Ferrous Scrap Index, as reported by S&P Global Platts (formerly Platts/SPI), and the Industrial Energy Cost Index. Exhibit C further establishes baseline costs — specifically, a baseline scrap cost of $340 per ton and a baseline energy cost of $48 per ton — against which index movements are measured to determine the permissible surcharge amount. Our analysis, however, reveals that Cardinal Peak did not use the contractually mandated indices in computing several of its surcharge invoices. Instead, Cardinal Peak applied an internal "blended cost" metric that incorporates its own proprietary cost data, which is neither published nor subject to independent verification, and which does not correspond to the indices specified in Exhibit C. This methodology deviation resulted in an overstatement of surcharges in the approximate amount of $1.47 million.

(c) Cap Exceedances (Section 7.4(c)). Section 7.4(c) of the MSA imposes a 12% cap on surcharges, calculated as a percentage of the applicable base price for HRC or CRC. Under this provision, any surcharge exceeding 12% of the base price requires Nexford's prior written consent before it may be charged. For four (4) of the disputed months, Cardinal Peak invoiced surcharges that exceeded the 12% cap without having obtained Nexford's prior written consent. The aggregate amount of surcharges in excess of the 12% cap for these months is approximately $1.08 million.

Overlap Among Defense Categories and Net Exposure. We note that there is overlap among the three defense categories described above. Certain months are affected by more than one defense — for example, a particular month may involve both a late Surcharge Notice and a methodology deviation, or both a methodology deviation and a cap exceedance. After accounting for this overlap and performing a month-by-month reconciliation, Nexford's calculated maximum additional exposure — that is, the amount Nexford may owe beyond the $1.68 million already paid — is approximately $0.21 million. This figure assumes that the defenses discussed above are sustained in their entirety and reflects what we believe to be the most conservative reasonable assessment of Nexford's remaining payment obligation.

III. Significant Litigation Developments

A. Answer and Affirmative Defenses (Filed September 19, 2022)

On September 19, 2022, Calderwood & Harkness filed the Answer and Affirmative Defenses on behalf of Nexford in the Circuit Court of Cook County. The filing was timely made within the applicable response period following service of the Complaint. The Answer specifically denies liability on all three counts asserted by Cardinal Peak — breach of contract, unjust enrichment, and account stated — and puts Cardinal Peak to its burden of proof on every material allegation.

In addition to the general denial of liability, the Answer asserts the following affirmative defenses, each of which is grounded in the express terms of the MSA:

First Affirmative Defense — Waiver. Cardinal Peak waived its right to collect surcharges for the months in which it failed to deliver Surcharge Notices within the fifteen (15) business-day deadline prescribed by MSA Section 7.4(a). The notice requirement is a material condition of the surcharge mechanism, and Cardinal Peak's failure to comply with it in seven of the fourteen disputed months constitutes a waiver of the right to collect the corresponding surcharge amounts.

Second Affirmative Defense — Failure of Condition Precedent. Relatedly, to the extent the Court does not treat the late notice as a waiver, the timely delivery of Surcharge Notices operates as a condition precedent to Cardinal Peak's right to recover surcharges under the MSA. Cardinal Peak's failure to satisfy this condition precedent for the seven untimely months bars recovery of those surcharges as a matter of contract law.

Third Affirmative Defense — Breach by Cardinal Peak. Cardinal Peak breached its obligations under the MSA by failing to calculate surcharges in accordance with the Exhibit C Surcharge Methodology. Specifically, Cardinal Peak departed from the contractually mandated use of the Ferrous Scrap Index (as reported by Platts/SPI) and the Industrial Energy Cost Index, and instead used an internal "blended cost" metric that is not authorized by the MSA. The Exhibit C methodology specifies baseline costs of $340 per ton for scrap and $48 per ton for energy, against which index movements are to be measured. Cardinal Peak's deviation from this methodology resulted in materially overstated surcharge invoices, and Cardinal Peak cannot recover amounts calculated under a methodology that departs from its own contractual obligations.

Fourth Affirmative Defense — Contractual Cap. For four months during the disputed period, Cardinal Peak invoiced surcharges in excess of the 12% of Base Price cap established by MSA Section 7.4(c) without first obtaining Nexford's prior written consent, as required by that provision. Nexford is not obligated to pay surcharges in excess of the cap absent such consent, which was never given.

Fifth Affirmative Defense — Unjust Enrichment Barred by Express Contract. Cardinal Peak's unjust enrichment claim (Count II of the Complaint) is barred as a matter of law because an express written contract — the MSA — governs the precise subject matter in dispute. Under well-settled Illinois law, a party may not pursue an unjust enrichment claim where the parties' rights and obligations are governed by an express contract. See, e.g., Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575 (1st Dist. 2005); Nesby v. Strathmore Life Insurance, 346 Ill. App. 3d 564 (2004). This defense provides a strong basis for potential summary judgment or early dismissal of Count II.

The Answer was well-received by the Court and no objections to any of the affirmative defenses were raised at the status conference held on September 28, 2022.

B. Counterclaim (Filed October 3, 2022)

On October 3, 2022, Calderwood & Harkness filed a two-count Counterclaim on behalf of Nexford against Cardinal Peak. The decision to file the Counterclaim was made after careful strategic deliberation and in consultation with Deborah Whitfield's office. We believe the Counterclaim serves several important purposes: it shifts a portion of the litigation initiative to Nexford; it places Cardinal Peak on notice that its own contractual performance will be scrutinized; and it strengthens Nexford's position in any future settlement discussions by establishing that Nexford is not merely defending against claims but is affirmatively seeking relief of its own.

The Counterclaim asserts two counts:

Count I — Breach of Contract. Nexford alleges that Cardinal Peak breached the MSA by (i) failing to calculate surcharges in accordance with the Exhibit C Surcharge Methodology, (ii) failing to deliver Surcharge Notices within the time frames required by MSA Section 7.4(a), and (iii) invoicing surcharges in excess of the 12% cap without Nexford's prior written consent. These breaches caused Nexford to incur costs associated with disputing the invoices, diverting internal resources to the surcharge dispute, and defending against this litigation.

Count II — Declaratory Judgment. Nexford seeks a declaratory judgment from the Court establishing that Nexford's payment obligations under MSA Section 7.4 are limited to surcharges that are (a) properly calculated in accordance with the Exhibit C Surcharge Methodology, (b) supported by timely Surcharge Notices delivered within the fifteen-business-day deadline, and (c) within the 12% of Base Price cap absent prior written consent. This count is designed to provide clarity regarding the parties' contractual rights going forward, as the MSA remains in effect and the parties continue to transact business thereunder.

In addition, the Counterclaim seeks recovery of approximately $0.21 million, which Nexford contends represents an overpayment to Cardinal Peak — specifically, the amount by which payments made by Nexford exceed the properly calculated surcharges when the Exhibit C methodology and Section 7.4 limitations are correctly applied.

The Counterclaim was served on Blackwood Stein & Associates LLP on October 3, 2022, and Cardinal Peak's response was due on or about November 2, 2022. Rather than filing an Answer to the Counterclaim, Cardinal Peak elected to file a Motion to Dismiss, which is discussed in the following section.

C. Motion to Dismiss Counterclaim (Denied November 14, 2022)

On October 28, 2022, Cardinal Peak, through Blackwood Stein & Associates LLP, filed a Motion to Dismiss Nexford's Counterclaim pursuant to 735 ILCS 5/2-615, arguing two principal grounds: first, that the Counterclaim was entirely duplicative of Nexford's affirmative defenses and therefore did not state independent claims for relief; and second, that the declaratory judgment count failed to present an actual controversy warranting judicial resolution, because Cardinal Peak contended the contractual interpretation issues could be fully resolved in the context of Cardinal Peak's own claims.

Calderwood & Harkness filed its Memorandum in Opposition to Cardinal Peak's Motion to Dismiss on November 2, 2022. Our opposition brief argued that the Counterclaim states viable and independent claims for both breach of contract and declaratory judgment under Illinois law. Specifically, we demonstrated that:

(i) The breach of contract claim in Count I of the Counterclaim is not duplicative of the affirmative defenses because it seeks affirmative relief — including damages — flowing from Cardinal Peak's own breaches of the MSA, which is distinct from the defensive posture of the affirmative defenses;

(ii) The declaratory judgment claim in Count II addresses a live and actual controversy regarding the proper interpretation and application of MSA Section 7.4 and Exhibit C, which has ongoing prospective significance because the MSA remains in effect through January 2023;

(iii) Illinois courts have repeatedly held that a party may assert both affirmative defenses and counterclaims arising from the same contractual relationship, and the mere existence of overlap does not render the counterclaims duplicative or improper; and

(iv) The specific MSA provisions, the Exhibit C methodology, and the parties' course of dealing all support the viability and independence of the Counterclaim.

On November 14, 2022, the Honorable Judge Patricia Winslow issued a written order denying Cardinal Peak's Motion to Dismiss the Counterclaim. The Court found that Nexford's Counterclaim adequately states claims that are distinct from its affirmative defenses and present justiciable issues warranting adjudication. The Court further noted that the declaratory judgment count addresses an active controversy with practical consequences for the parties' ongoing commercial relationship.

This ruling is significant for several reasons. It confirms that the Court will permit Nexford to pursue affirmative relief against Cardinal Peak, thereby establishing Nexford as both defendant and counter-plaintiff. It places Cardinal Peak squarely on notice that its own contractual compliance is at issue and will be subject to scrutiny. And it signals the Court's receptiveness to Nexford's reading of the MSA, which bodes well for our defense posture going forward. Cardinal Peak must now file an Answer to the Counterclaim, which is anticipated in early January 2023.

IV. Discovery Phase

A. Written discovery Served (December 5, 2022)

On December 5, 2022, Calderwood & Harkness served Nexford's First Set of Interrogatories (Nos. 1–18) and Nexford's First Set of Requests for Production of Documents (Nos. 1–24) on Cardinal Peak, through its counsel at Blackwood Stein & Associates LLP. These discovery requests were carefully crafted to develop the factual record on the issues most critical to Nexford's defenses and Counterclaim.

The Interrogatories are designed to elicit detailed information regarding:

• The specific calculation methodology Cardinal Peak applied to each surcharge invoice during the disputed period, including the data sources, indices, and cost inputs used;

• Cardinal Peak's internal pricing policies and any deviations from the Exhibit C Surcharge Methodology, including any authorization or internal approval for the use of the "blended cost" metric;

• The exact dates on which each Surcharge Notice was prepared, approved, and delivered to Nexford, along with the method of delivery;

• The identification of all persons with knowledge of the Exhibit C methodology and its application to the disputed surcharge invoices, including any consultants, accountants, or third parties involved in the surcharge calculation process;

• The factual basis for each of Cardinal Peak's three causes of action, including the unjust enrichment claim (which we believe is subject to dismissal) and the account stated claim; and

• The basis for Cardinal Peak's contention that the surcharges invoiced were consistent with industry practice and the MSA.

The Requests for Production are designed to obtain the following categories of documents:

• All Surcharge Notices issued by Cardinal Peak during the disputed period (March 2021 through May 2022), including all attachments, cover letters, and transmittal records;

• All supporting calculations, worksheets, and internal surcharge computation documents used by Cardinal Peak to determine the amount of each surcharge invoice;

• All communications — internal and external — regarding the "blended cost" methodology, including any discussions of the decision to depart from the Exhibit C methodology;

• All Ferrous Scrap Index data (as published by Platts/SPI) and Industrial Energy Cost Index data obtained, referenced, or considered (or not obtained, referenced, or considered) by Cardinal Peak during the disputed period;

• All correspondence between Cardinal Peak and Nexford regarding surcharge disputes, including any emails, letters, meeting notes, or memoranda related to Nexford's objections to the surcharge invoices; and

• All documents relating to the unjust enrichment and account stated claims, including any internal analyses of Cardinal Peak's position regarding the propriety of those causes of action.

Under the applicable Illinois Supreme Court Rules, Cardinal Peak's responses to these discovery requests are due in late January 2023. We will monitor the response deadline closely and will not hesitate to pursue a motion to compel should Cardinal Peak's responses prove deficient or untimely.

B. Anticipated discovery Activity — Q1 2023

Cardinal Peak has also commenced its own discovery. On November 28, 2022, Blackwood Stein served Cardinal Peak's First Set of Interrogatories and First Set of Requests for Production of Documents on Nexford. We are currently in the process of preparing Nexford's responses to these discovery requests, which are due on January 9, 2023. We will be coordinating with Deborah Whitfield and the relevant Nexford personnel to gather responsive documents and ensure the accuracy and completeness of the interrogatory responses. We anticipate scheduling a document review session with your team during the first week of January to finalize these responses.

In addition, the parties are currently in the process of scheduling the first two fact depositions in the case:

Natalie Gunderson, Cardinal Peak VP, Sales & Commercial. Ms. Gunderson is identified in the Complaint and in Cardinal Peak's initial disclosures as a key witness with direct knowledge of the surcharge invoicing process, the Surcharge Notices, and Cardinal Peak's relationship with Nexford. We anticipate that her deposition will be noticed for mid-January 2023 and will take place at the offices of Calderwood & Harkness in Chicago. Our examination of Ms. Gunderson will focus on her knowledge of the Exhibit C methodology, her understanding of the "blended cost" metric, the internal approval process for the surcharge invoices, and the circumstances surrounding the late delivery of Surcharge Notices.

Russell Okonkwo, Nexford VP, Procurement. Mr. Okonkwo is Nexford's primary fact witness in this matter. He was responsible for reviewing and processing Cardinal Peak's surcharge invoices and for raising objections when Nexford identified discrepancies. We anticipate that Cardinal Peak will notice his deposition for early February 2023. We will work closely with Mr. Okonkwo to prepare him thoroughly for his deposition and will coordinate with your office to schedule preparation sessions well in advance of the deposition date. It is critically important that Mr. Okonkwo's testimony be consistent with the documentary record and with Nexford's overall litigation strategy, and we will devote significant attention to his preparation.

Additional depositions may be noticed as discovery progresses; we will keep you advised as the deposition schedule develops.

V. Expert Retention — Meridian Bridge Consulting LLC

On December 12, 2022, Calderwood & Harkness formally retained Meridian Bridge Consulting LLC to serve as Nexford's damages analysis and expert consulting firm in connection with this Litigation. Meridian Bridge is a well-regarded forensic accounting and economic consulting firm based in Chicago, and we have worked with them successfully on prior engagements involving complex contract disputes and damages analyses.

Dr. Anita Rosenthal, CPA, ABV, of Meridian Bridge Consulting LLC, located at 311 South Michigan Avenue, Suite 1500, Chicago, Illinois 60604, will serve as the lead expert consultant. Dr. Rosenthal holds a Ph.D. in Economics from the University of Chicago, is a Certified Public Accountant, and carries the Accredited in Business Valuation (ABV) credential from the American Institute of Certified Public Accountants. She has extensive experience in commercial damages analysis, contract dispute quantification, and expert testimony in state and federal courts.

Dr. Rosenthal's scope of engagement includes the following:

• Invoice-by-Invoice Analysis. Analyzing each of the fourteen (14) disputed surcharge invoices issued by Cardinal Peak during the March 2021 through May 2022 period, applying the Exhibit C Surcharge Methodology to determine the correct surcharge amount for each month.

• Methodology Comparison. Comparing Cardinal Peak's surcharge calculations — including those using the internal "blended cost" metric — against the calculations that would result from proper application of the Exhibit C Surcharge Methodology, including the published Ferrous Scrap Index (Platts/SPI) and Industrial Energy Cost Index data for each relevant month.

• Index Verification. Verifying the actual Ferrous Scrap Index and Industrial Energy Cost Index values for each month in the disputed period and determining whether Cardinal Peak's surcharge invoices are consistent with those published index values.

• Quantification of Defenses. Quantifying the dollar impact of each of Nexford's three principal defenses — late Surcharge Notices, methodology deviation, and cap exceedances — on a month-by-month basis, including identification of overlapping defense categories.

• Expert Report Preparation. Preparing a comprehensive rebuttal expert report suitable for submission in connection with dispositive motions or at trial, setting forth Dr. Rosenthal's opinions, methodology, and supporting analysis.

We anticipate that Cardinal Peak will retain its own damages expert in the coming weeks. Under the anticipated discovery schedule, expert reports are expected to be exchanged in Q1 2023, with rebuttal reports to follow approximately thirty days thereafter. We will keep you informed of any developments regarding Cardinal Peak's expert retention and the expert discovery timeline.

The engagement of Meridian Bridge Consulting LLC is subject to a separate engagement letter, a copy of which has been provided to Deborah Whitfield's office for review and execution. Dr. Rosenthal's standard hourly rate is $625 per hour, which is consistent with the rates of comparable forensic accounting experts in the Chicago market.

VI. Legal Research and Analysis

In addition to the litigation filings and discovery activity described above, Calderwood & Harkness completed several internal legal research and analysis memoranda during the period covered by this report. These memoranda have been prepared to support our litigation strategy and to provide a thorough foundation for the legal arguments we are advancing on Nexford's behalf. While these memoranda are internal work product and are not separately enclosed with this letter, we summarize their scope and conclusions below for your reference:

September 8, 2022 — Illinois Surcharge Pass-Through Law Memorandum. This research memorandum analyzes Illinois law governing surcharge pass-through provisions in commercial supply contracts, including the enforceability of condition precedent requirements (such as the notice deadline in Section 7.4(a)), waiver doctrines under Illinois contract law, and the enforceability of price-cap provisions under the Illinois Uniform Commercial Code. The memorandum concludes that Illinois courts enforce notice-as-condition-precedent provisions strictly, and that a supplier's failure to comply with a contractually specified notice deadline may bar recovery of the corresponding surcharge. The memorandum further concludes that the 12% cap provision in Section 7.4(c) is enforceable as a material term of the parties' bargain.

September 12, 2022 — MSA Section 7.4 Detailed Analysis. This memorandum provides a provision-by-provision analysis of MSA Section 7.4, including Subsections 7.4(a) through 7.4(e) and Exhibit C (Surcharge Methodology). The memorandum quantifies Nexford's exposure under each defense category on a month-by-month basis, identifies the overlap among the three defense categories, and calculates Nexford's maximum additional exposure at approximately $0.21 million. This analysis has served as the foundational document for our litigation strategy and for the engagement of Meridian Bridge Consulting.

October 15, 2022 — Unjust Enrichment Claim Analysis. This memorandum analyzes the viability of Cardinal Peak's unjust enrichment claim (Count II of the Complaint) under Illinois law. The memorandum concludes that the claim is barred as a matter of law because an express contract — the MSA — governs the precise subject matter in dispute. Under well-settled Illinois precedent, a plaintiff may not pursue an unjust enrichment theory where the parties' rights and obligations are defined by an express contract covering the same subject matter. This analysis provides a strong basis for a potential motion for summary judgment or, alternatively, for a motion to narrow the claims prior to trial.

These analyses continue to support our overall assessment that Nexford's contractual defenses are strong and well-grounded in the express terms of the MSA. The late-notice defense, which affects seven of the fourteen disputed months and accounts for approximately $2.18 million in disputed surcharges, is the single most impactful defense. The methodology deviation defense, which accounts for approximately $1.47 million, is also compelling given the clear and specific methodology prescribed by Exhibit C. Together, these defenses significantly reduce Nexford's potential exposure and provide substantial leverage in any settlement discussions.

VII. Assessment of Current Litigation Posture

Based on the developments to date, we believe Nexford is in a strong defensive position as the case enters the discovery phase. Our assessment of the current litigation posture is as follows:

Strengths:

• Counterclaim Posture. The Counterclaim survived Cardinal Peak's Motion to Dismiss, establishing Nexford as both defendant and counter-plaintiff. This dual posture strengthens Nexford's position at every stage of the litigation — in discovery, in settlement discussions, and at trial. Cardinal Peak must now defend against Nexford's affirmative claims while prosecuting its own.

• Contractual Defenses. All three of Nexford's principal affirmative defenses are well-supported by the express language of the MSA, the Exhibit C Surcharge Methodology, and the available documentation. The contractual provisions at issue are clear and unambiguous, which favors Nexford's interpretive position and reduces the risk that the Court will look beyond the four corners of the agreement.

• Unjust Enrichment Vulnerability. Cardinal Peak's unjust enrichment claim (Count II) appears highly vulnerable given the existence of the MSA governing the precise subject matter in dispute. We believe this claim can be eliminated on summary judgment, which would narrow the case and simplify the trial presentation.

• Account Stated Claim Weakness. The account stated claim (Count III) is weak on its facts. Under Illinois law, an account stated requires an agreement — express or implied — between the parties as to the correctness of the account. Nexford timely disputed the surcharge invoices within the thirty (30) day period prescribed by MSA Section 7.4(d), and Cardinal Peak cannot establish the acquiescence or agreement necessary to sustain this cause of action. We believe this claim is also subject to dismissal on summary judgment.

Risks to Monitor:

• Course of Dealing Argument. Cardinal Peak may argue that Nexford's course of dealing — specifically, the fact that Nexford paid certain surcharges calculated using the "blended cost" methodology in earlier periods that are outside the disputed timeframe — constitutes a waiver of, or implied agreement to modify, the Exhibit C Surcharge Methodology. This is the most significant risk we have identified to date. We are developing a factual and legal response to this potential argument, which will include evidence that Nexford consistently objected to the blended cost methodology in correspondence and that any payments made under that methodology were made under reservation of rights or without knowledge of the deviation. This issue will be a central focus of both the Gunderson and Okonkwo depositions and of our expert analysis.

• Surcharge Notice Delivery Dates. The factual question of whether certain Surcharge Notices were timely delivered may turn on evidence of the precise delivery dates. For some of the disputed months, the timeliness issue is clear-cut (notices were delivered weeks after the deadline), but for two or three months, the issue may be closer and will depend on documentary evidence of delivery — such as email transmission records, courier receipts, or certified mail tracking — that will be developed in discovery. We have tailored our document requests to Cardinal Peak to obtain this evidence.

Mediation. We also note that the MSA's dispute resolution clause, Section 14.3, requires mandatory mediation in Chicago before litigation may proceed to trial. The parties have not yet invoked this provision, and we recommend deferring mediation until after core fact discovery and expert report exchanges are substantially complete, so that Nexford can negotiate from a position of maximum informational advantage. We anticipate that mediation may become appropriate in Q2 or Q3 of 2023, depending on the pace of discovery.

VIII. Budget and Fee Summary

At the time Calderwood & Harkness's engagement was opened on August 22, 2022, we provided an estimated litigation budget of $200,000 to $275,000 through mediation and $350,000 to $500,000 through trial. These estimates remain our current working projections, subject to adjustment based on the scope and complexity of discovery, the number of depositions required, and any unforeseen motions or procedural developments.

The current billing rates for the primary timekeepers assigned to this matter are as follows:

Through the end of Q4 2022, total fees billed and costs incurred remain within the budgeted trajectory for the pre-discovery and early-discovery phase of the Litigation. Detailed invoices reflecting all time entries and costs have been submitted separately through Calderwood & Harkness's regular monthly billing cycle, and we understand that all invoices through the November 2022 billing cycle have been received and processed by Nexford's accounts payable department. The December 2022 invoice will be transmitted in the ordinary course in early January 2023.

We anticipate that Q1 2023 expenditures will increase relative to the Q4 2022 run rate, driven by several factors: (i) deposition costs, including court reporter fees, transcript charges, and videography (if elected); (ii) expert fees for Meridian Bridge Consulting LLC, as Dr. Rosenthal's analysis of the fourteen disputed invoices intensifies; (iii) the preparation and service of Nexford's responses to Cardinal Peak's discovery requests; and (iv) the preparation of Mr. Okonkwo and other Nexford witnesses for deposition testimony. We will continue to monitor expenditures closely and will communicate with Deborah Whitfield's office promptly if we anticipate any material deviation from the budget.

IX. Lender and Stakeholder Considerations

We call your attention to a matter that, while not currently requiring action, warrants advance planning. Under Section 6.03(b) of Nexford's $45 million revolving credit facility with Ridgecrest National Bank, N.A. (dated March 12, 2021) (the "Credit Facility"), Nexford is required to provide notice to the lender in the event that any litigation settlement exceeds $1.0 million. No settlement notice is currently required, as no settlement has been proposed or agreed upon. However, given that Cardinal Peak's claimed damages of $4.73 million significantly exceed the $1.0 million notice threshold, any settlement of this dispute — should one be negotiated — is likely to require notice under the Credit Facility. We flag this for your planning purposes so that the appropriate internal and external notifications can be coordinated in advance should settlement discussions arise in Q1 or Q2 2023.

We also understand that Diana Calloway of Marlowe Asset Management Bluff Capital Partners, LP ("Marlowe Asset Management Bluff"), continues to serve as board observer for Nexford in connection with Marlowe Asset Management Bluff's equity investment, and that Marlowe Asset Management Bluff is being kept informed of significant litigation developments as a matter of course. We have copied Ms. Calloway on this letter for that purpose. Should Marlowe Asset Management Bluff require any additional information or wish to discuss any aspect of the Litigation directly with Calderwood & Harkness, we are available to do so at your direction.

X. Next Steps and Anticipated Q1 2023 Activity

Looking ahead to the first quarter of 2023, we anticipate the following activity in connection with this Litigation:

1. Nexford's discovery Responses (Due January 9, 2023). We will complete and serve Nexford's responses to Cardinal Peak's First Set of Interrogatories and First Set of Requests for Production of Documents. We will coordinate with your team during the first week of January to finalize responsive documents and interrogatory answers.

2. Deposition of Natalie Gunderson (Anticipated January 2023). We will conduct the deposition of Natalie Gunderson, Cardinal Peak's Vice President of Sales & Commercial, who is a key fact witness with direct knowledge of the surcharge invoicing process. This deposition will focus on the Exhibit C methodology, the "blended cost" metric, and the timeliness of Surcharge Notices.

3. Preparation and Defense of Russell Okonkwo's Deposition (Anticipated February 2023). We will prepare Russell Okonkwo, Nexford's Vice President of Procurement, for his deposition and will defend the deposition when it takes place. Multiple preparation sessions will be scheduled in advance.

4. Review and Analysis of Cardinal Peak's discovery Responses. Upon receipt of Cardinal Peak's responses to Nexford's First Set of Interrogatories and Requests for Production (due in late January 2023), we will conduct a thorough review and analysis of the documents and information produced, identifying any deficiencies and preparing follow-up discovery requests or a motion to compel as warranted.

5. Expert Engagement — Meridian Bridge Consulting. We will continue our engagement with Dr. Anita Rosenthal at Meridian Bridge Consulting LLC to develop the expert damages analysis and prepare the rebuttal expert report. This work will intensify as Cardinal Peak's discovery responses are received and as the underlying surcharge data is assembled and analyzed.

6. Monitoring Cardinal Peak's Expert Retention. We will monitor for any disclosure by Cardinal Peak of its own damages expert and will evaluate the qualifications and likely testimony of any such expert once identified.

7. Mediation Timing Evaluation. We will continue to evaluate the appropriate timing for invoking the mandatory mediation provision under MSA Section 14.3, with a view toward commencing mediation after core fact discovery and expert report exchanges are substantially complete. We will discuss mediation timing with you in greater detail in our next quarterly report.

8. Q1 2023 Status Report. We will provide the next quarterly status report in March 2023, covering developments through the end of Q1 2023.

XI. Closing

We trust this report provides a comprehensive and useful overview of the current status of the Litigation and the progress achieved during Q4 2022. We are encouraged by the results to date and remain confident in the strength of Nexford's defenses and the overall litigation strategy. Please do not hesitate to contact me or any member of the Calderwood & Harkness team if you have questions, require additional information, or wish to schedule a telephone conference or in-person meeting to discuss any aspect of this report in greater detail. We are available at your convenience.

As a final reminder, this letter and its contents — including all factual summaries, legal analyses, strategic assessments, and budgetary information contained herein — are protected by the attorney-client privilege and constitute confidential attorney work product. This letter should not be shared with, disclosed to, or discussed with any person or entity outside the privileged circle — including Nexford's officers, directors, employees, lenders, auditors, or other third parties — without first consulting with Calderwood & Harkness to ensure that the privilege is not inadvertently waived. Please contact me directly if you have any questions about the scope of the privilege or the appropriate handling of this correspondence.

We look forward to continuing to represent Nexford vigorously in this matter and to providing you with our next quarterly update in March 2023.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand Partner

Direct Telephone: (312) 555-7218 Direct Facsimile: (312) 555-7219

Email: panand@calderwoodharkness.com

cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP Douglas Carmichael, Billing Partner, Calderwood & Harkness LLP

Enclosures: None (invoices transmitted separately through the firm's regular billing cycle)

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL This letter and its contents are protected by the attorney-client privilege and the work product doctrine. Any unauthorized disclosure, copying, or distribution is strictly prohibited.

Timekeeper	Role	Rate
Priya Anand	Partner (Responsible)	$895/hr
Douglas Carmichael	Partner (Billing)	$875/hr
Simone Laroche	Senior Associate	$585/hr
Jeffrey Park	Associate	$435/hr
Paralegal Staff	Paralegal	$275/hr

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law 200 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 Telephone: (312) 555-7200 Facsimile: (312) 555-7201 www.calderwoodharkness.com
December 20, 2022
VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL
Deborah Whitfield, Esq. General Counsel Nexford Industrial Holdings Inc. 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085
Martin Schaeffer Chief Executive Officer Nexford Industrial Holdings Inc. 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085
Re: Quarterly Status Report — Q4 2022 Cardinal Peak Industries v. Nexford Industrial Holdings Inc. Case No. 2022-L-008471 Circuit Court of Cook County, Illinois County Department, Law Division Firm Matter No.: 1005-00005
cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP, 875 North Michigan Avenue, Suite 3600, Chicago, Illinois 60611 Douglas Carmichael, Billing Partner, Calderwood & Harkness LLP
Dear Deborah and Martin:
We write to provide you with a comprehensive quarterly update on the status of the litigation brought by Cardinal Peak Industries ("Cardinal Peak" or "CPI") against Nexford Industrial Holdings Inc. ("Nexford") in the Circuit Court of Cook County, Illinois, Case No. 2022-L-008471 (the "Litigation"). As you know, Calderwood & Harkness LLP was engaged to represent Nexford in this matter, and our engagement was formally opened on August 22, 2022. This letter covers all significant developments during the fourth quarter of 2022 — encompassing the period from October through December 2022 — together with a summary of the significant filings from the initial weeks of our engagement in September 2022, which were not previously covered in a formal written status report. This letter is intended to serve as a consolidated record of the progress made since the inception of the engagement.
We have organized this report into the following sections for your convenience: (I) Executive Summary; (II) Background and Case Overview; (III) Significant Litigation Developments; (IV) discovery Phase; (V) Expert Retention; (VI) Legal Research and Analysis; (VII) Assessment of Current Litigation Posture; (VIII) Budget and Fee Summary; (IX) Lender and Stakeholder Considerations; (X) Next Steps and Anticipated Q1 2023 Activity; and (XI) Closing. We encourage you to review each section carefully and to contact us with any questions.
I. Executive Summary
We are pleased to report that Calderwood & Harkness has successfully defended against Cardinal Peak's initial attempts to narrow Nexford's defenses and has secured a favorable procedural posture as the case enters the discovery phase. The key accomplishments during the period covered by this report are as follows:
• Answer and Affirmative Defenses Filed (September 19, 2022). We filed a comprehensive Answer and Affirmative Defenses on behalf of Nexford, denying liability on all three counts and asserting five affirmative defenses grounded in the express terms of the Master Supply Agreement between the parties.
• Counterclaim Filed (October 3, 2022). We filed a two-count Counterclaim on behalf of Nexford, asserting breach of contract by Cardinal Peak and seeking declaratory judgment clarifying Nexford's limited payment obligations under the Master Supply Agreement. This filing was a critical strategic step, placing Cardinal Peak on the defensive and strengthening Nexford's position in any future settlement negotiations.
• Motion to Dismiss Counterclaim Denied (November 14, 2022). Cardinal Peak's counsel moved to dismiss the Counterclaim, arguing it was duplicative and failed to state a viable claim for declaratory relief. We opposed the motion vigorously, and on November 14, 2022, the Court denied the motion in its entirety, confirming that Nexford's Counterclaim states distinct and viable claims for affirmative relief.
• Written discovery Commenced (December 5, 2022). On December 5, 2022, we served Nexford's First Set of Interrogatories and First Set of Requests for Production on Cardinal Peak, targeting the specific surcharge calculation methodology employed by Cardinal Peak, the timeliness of its Surcharge Notices, and the factual bases for each of its claims.
• Expert Retained (December 12, 2022). On December 12, 2022, we retained Meridian Bridge Consulting LLC, with Dr. Anita Rosenthal, CPA, ABV, serving as lead expert consultant, to analyze the disputed surcharge invoices and prepare expert testimony on damages.
As previously discussed, Cardinal Peak continues to claim $4.73 million in allegedly unpaid surcharges under the Master Supply Agreement (MSA-NIH-CPI-2020-001), which was executed on January 15, 2020 (the "MSA" or "Master Supply Agreement"). Nexford's position remains firm and well-supported by the contractual language: applying the three principal contractual defenses under MSA Section 7.4 — namely, the late Surcharge Notice defense, the methodology deviation defense, and the 12% surcharge cap defense — Nexford owes at most an additional $0.21 million beyond the $1.68 million already paid to Cardinal Peak during the disputed period. We remain confident in the strength of these defenses, which are discussed in detail below.
II. Background and Case Overview
For the benefit of the full record and to ensure all recipients of this letter have a complete understanding of the dispute, we provide the following summary of the case background.
The Complaint. On August 8, 2022, Cardinal Peak filed its Complaint in the Circuit Court of Cook County, Illinois, County Department, Law Division, asserting three causes of action against Nexford: (1) Breach of Contract; (2) Unjust Enrichment; and (3) Account Stated. The case was assigned Case No. 2022-L-008471 and is before the Honorable Judge Patricia Winslow in the Law Division.
Cardinal Peak's Allegations. The core of Cardinal Peak's claims is that Nexford improperly rejected or only partially paid raw-material surcharge invoices issued by Cardinal Peak over a fourteen-month period, from March 2021 through May 2022. Cardinal Peak alleges that during this period, it invoiced Nexford a total of $6.41 million in surcharges, of which Nexford paid only $1.68 million, leaving an alleged unpaid balance of $4.73 million. We note that the surcharges invoiced for April 2021 were paid in full by Nexford and are not in dispute; accordingly, the contested period comprises the remaining thirteen months of the fourteen-month invoicing period.
Cardinal Peak's Counsel. Cardinal Peak is represented by the law firm of Blackwood Stein & Associates LLP, based in Denver, Colorado. The lead partner on the matter is Garrett Blackwood, who is admitted pro hac vice in the Cook County Circuit Court, with Megan Hsu serving as the primary associate. We have found opposing counsel to be generally professional in their communications, though aggressive in their litigation posture.
The Master Supply Agreement. The dispute arises under the Master Supply Agreement (MSA-NIH-CPI-2020-001), which was executed by the parties on January 15, 2020, for a three-year term. Under the MSA, Cardinal Peak agreed to supply Nexford with hot-rolled coil ("HRC") at a base price of $620 per ton and cold-rolled coil ("CRC") at a base price of $740 per ton, with estimated annual volumes of approximately 18,000 tons of HRC and 6,500 tons of CRC. This represents an approximate annual spend under the MSA of $15.97 million, making the agreement a material commercial relationship for both parties.
The Surcharge Mechanism — MSA Section 7.4. Section 7.4 of the MSA establishes the mechanism by which Cardinal Peak may pass through increases in raw-material and energy costs to Nexford in the form of surcharges. This provision is the central contractual provision at issue in the Litigation. Importantly, Section 7.4 includes several conditions and limitations on Cardinal Peak's right to impose surcharges, which form the basis of Nexford's defenses. Specifically:
(a) Late Surcharge Notices (Section 7.4(a)). The MSA requires Cardinal Peak to deliver a written "Surcharge Notice" to Nexford within fifteen (15) business days following the end of each calendar month in which a surcharge is claimed. This notice requirement operates as a condition precedent to Cardinal Peak's right to collect the surcharge. Our analysis of Cardinal Peak's invoicing records and Nexford's correspondence files indicates that Cardinal Peak failed to deliver timely Surcharge Notices in seven (7) of the fourteen (14) disputed months. The surcharge amounts corresponding to these seven late-notice months total approximately $2.18 million. We contend that Cardinal Peak's failure to comply with the notice deadline waives or extinguishes its right to collect these surcharges.
(b) Methodology Deviation (Exhibit C — Surcharge Methodology). Exhibit C to the MSA prescribes the specific methodology Cardinal Peak must use to calculate surcharges. This methodology is tied to two published, independent indices: the Ferrous Scrap Index, as reported by S&P Global Platts (formerly Platts/SPI), and the Industrial Energy Cost Index. Exhibit C further establishes baseline costs — specifically, a baseline scrap cost of $340 per ton and a baseline energy cost of $48 per ton — against which index movements are measured to determine the permissible surcharge amount. Our analysis, however, reveals that Cardinal Peak did not use the contractually mandated indices in computing several of its surcharge invoices. Instead, Cardinal Peak applied an internal "blended cost" metric that incorporates its own proprietary cost data, which is neither published nor subject to independent verification, and which does not correspond to the indices specified in Exhibit C. This methodology deviation resulted in an overstatement of surcharges in the approximate amount of $1.47 million.
(c) Cap Exceedances (Section 7.4(c)). Section 7.4(c) of the MSA imposes a 12% cap on surcharges, calculated as a percentage of the applicable base price for HRC or CRC. Under this provision, any surcharge exceeding 12% of the base price requires Nexford's prior written consent before it may be charged. For four (4) of the disputed months, Cardinal Peak invoiced surcharges that exceeded the 12% cap without having obtained Nexford's prior written consent. The aggregate amount of surcharges in excess of the 12% cap for these months is approximately $1.08 million.
Overlap Among Defense Categories and Net Exposure. We note that there is overlap among the three defense categories described above. Certain months are affected by more than one defense — for example, a particular month may involve both a late Surcharge Notice and a methodology deviation, or both a methodology deviation and a cap exceedance. After accounting for this overlap and performing a month-by-month reconciliation, Nexford's calculated maximum additional exposure — that is, the amount Nexford may owe beyond the $1.68 million already paid — is approximately $0.21 million. This figure assumes that the defenses discussed above are sustained in their entirety and reflects what we believe to be the most conservative reasonable assessment of Nexford's remaining payment obligation.
III. Significant Litigation Developments
A. Answer and Affirmative Defenses (Filed September 19, 2022)
On September 19, 2022, Calderwood & Harkness filed the Answer and Affirmative Defenses on behalf of Nexford in the Circuit Court of Cook County. The filing was timely made within the applicable response period following service of the Complaint. The Answer specifically denies liability on all three counts asserted by Cardinal Peak — breach of contract, unjust enrichment, and account stated — and puts Cardinal Peak to its burden of proof on every material allegation.
In addition to the general denial of liability, the Answer asserts the following affirmative defenses, each of which is grounded in the express terms of the MSA:
First Affirmative Defense — Waiver. Cardinal Peak waived its right to collect surcharges for the months in which it failed to deliver Surcharge Notices within the fifteen (15) business-day deadline prescribed by MSA Section 7.4(a). The notice requirement is a material condition of the surcharge mechanism, and Cardinal Peak's failure to comply with it in seven of the fourteen disputed months constitutes a waiver of the right to collect the corresponding surcharge amounts.
Second Affirmative Defense — Failure of Condition Precedent. Relatedly, to the extent the Court does not treat the late notice as a waiver, the timely delivery of Surcharge Notices operates as a condition precedent to Cardinal Peak's right to recover surcharges under the MSA. Cardinal Peak's failure to satisfy this condition precedent for the seven untimely months bars recovery of those surcharges as a matter of contract law.
Third Affirmative Defense — Breach by Cardinal Peak. Cardinal Peak breached its obligations under the MSA by failing to calculate surcharges in accordance with the Exhibit C Surcharge Methodology. Specifically, Cardinal Peak departed from the contractually mandated use of the Ferrous Scrap Index (as reported by Platts/SPI) and the Industrial Energy Cost Index, and instead used an internal "blended cost" metric that is not authorized by the MSA. The Exhibit C methodology specifies baseline costs of $340 per ton for scrap and $48 per ton for energy, against which index movements are to be measured. Cardinal Peak's deviation from this methodology resulted in materially overstated surcharge invoices, and Cardinal Peak cannot recover amounts calculated under a methodology that departs from its own contractual obligations.
Fourth Affirmative Defense — Contractual Cap. For four months during the disputed period, Cardinal Peak invoiced surcharges in excess of the 12% of Base Price cap established by MSA Section 7.4(c) without first obtaining Nexford's prior written consent, as required by that provision. Nexford is not obligated to pay surcharges in excess of the cap absent such consent, which was never given.
Fifth Affirmative Defense — Unjust Enrichment Barred by Express Contract. Cardinal Peak's unjust enrichment claim (Count II of the Complaint) is barred as a matter of law because an express written contract — the MSA — governs the precise subject matter in dispute. Under well-settled Illinois law, a party may not pursue an unjust enrichment claim where the parties' rights and obligations are governed by an express contract. See, e.g., Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575 (1st Dist. 2005); Nesby v. Strathmore Life Insurance, 346 Ill. App. 3d 564 (2004). This defense provides a strong basis for potential summary judgment or early dismissal of Count II.
The Answer was well-received by the Court and no objections to any of the affirmative defenses were raised at the status conference held on September 28, 2022.
B. Counterclaim (Filed October 3, 2022)
On October 3, 2022, Calderwood & Harkness filed a two-count Counterclaim on behalf of Nexford against Cardinal Peak. The decision to file the Counterclaim was made after careful strategic deliberation and in consultation with Deborah Whitfield's office. We believe the Counterclaim serves several important purposes: it shifts a portion of the litigation initiative to Nexford; it places Cardinal Peak on notice that its own contractual performance will be scrutinized; and it strengthens Nexford's position in any future settlement discussions by establishing that Nexford is not merely defending against claims but is affirmatively seeking relief of its own.
The Counterclaim asserts two counts:
Count I — Breach of Contract. Nexford alleges that Cardinal Peak breached the MSA by (i) failing to calculate surcharges in accordance with the Exhibit C Surcharge Methodology, (ii) failing to deliver Surcharge Notices within the time frames required by MSA Section 7.4(a), and (iii) invoicing surcharges in excess of the 12% cap without Nexford's prior written consent. These breaches caused Nexford to incur costs associated with disputing the invoices, diverting internal resources to the surcharge dispute, and defending against this litigation.
Count II — Declaratory Judgment. Nexford seeks a declaratory judgment from the Court establishing that Nexford's payment obligations under MSA Section 7.4 are limited to surcharges that are (a) properly calculated in accordance with the Exhibit C Surcharge Methodology, (b) supported by timely Surcharge Notices delivered within the fifteen-business-day deadline, and (c) within the 12% of Base Price cap absent prior written consent. This count is designed to provide clarity regarding the parties' contractual rights going forward, as the MSA remains in effect and the parties continue to transact business thereunder.
In addition, the Counterclaim seeks recovery of approximately $0.21 million, which Nexford contends represents an overpayment to Cardinal Peak — specifically, the amount by which payments made by Nexford exceed the properly calculated surcharges when the Exhibit C methodology and Section 7.4 limitations are correctly applied.
The Counterclaim was served on Blackwood Stein & Associates LLP on October 3, 2022, and Cardinal Peak's response was due on or about November 2, 2022. Rather than filing an Answer to the Counterclaim, Cardinal Peak elected to file a Motion to Dismiss, which is discussed in the following section.
C. Motion to Dismiss Counterclaim (Denied November 14, 2022)
On October 28, 2022, Cardinal Peak, through Blackwood Stein & Associates LLP, filed a Motion to Dismiss Nexford's Counterclaim pursuant to 735 ILCS 5/2-615, arguing two principal grounds: first, that the Counterclaim was entirely duplicative of Nexford's affirmative defenses and therefore did not state independent claims for relief; and second, that the declaratory judgment count failed to present an actual controversy warranting judicial resolution, because Cardinal Peak contended the contractual interpretation issues could be fully resolved in the context of Cardinal Peak's own claims.
Calderwood & Harkness filed its Memorandum in Opposition to Cardinal Peak's Motion to Dismiss on November 2, 2022. Our opposition brief argued that the Counterclaim states viable and independent claims for both breach of contract and declaratory judgment under Illinois law. Specifically, we demonstrated that:
(i) The breach of contract claim in Count I of the Counterclaim is not duplicative of the affirmative defenses because it seeks affirmative relief — including damages — flowing from Cardinal Peak's own breaches of the MSA, which is distinct from the defensive posture of the affirmative defenses;
(ii) The declaratory judgment claim in Count II addresses a live and actual controversy regarding the proper interpretation and application of MSA Section 7.4 and Exhibit C, which has ongoing prospective significance because the MSA remains in effect through January 2023;
(iii) Illinois courts have repeatedly held that a party may assert both affirmative defenses and counterclaims arising from the same contractual relationship, and the mere existence of overlap does not render the counterclaims duplicative or improper; and
(iv) The specific MSA provisions, the Exhibit C methodology, and the parties' course of dealing all support the viability and independence of the Counterclaim.
On November 14, 2022, the Honorable Judge Patricia Winslow issued a written order denying Cardinal Peak's Motion to Dismiss the Counterclaim. The Court found that Nexford's Counterclaim adequately states claims that are distinct from its affirmative defenses and present justiciable issues warranting adjudication. The Court further noted that the declaratory judgment count addresses an active controversy with practical consequences for the parties' ongoing commercial relationship.
This ruling is significant for several reasons. It confirms that the Court will permit Nexford to pursue affirmative relief against Cardinal Peak, thereby establishing Nexford as both defendant and counter-plaintiff. It places Cardinal Peak squarely on notice that its own contractual compliance is at issue and will be subject to scrutiny. And it signals the Court's receptiveness to Nexford's reading of the MSA, which bodes well for our defense posture going forward. Cardinal Peak must now file an Answer to the Counterclaim, which is anticipated in early January 2023.
IV. Discovery Phase
A. Written discovery Served (December 5, 2022)
On December 5, 2022, Calderwood & Harkness served Nexford's First Set of Interrogatories (Nos. 1–18) and Nexford's First Set of Requests for Production of Documents (Nos. 1–24) on Cardinal Peak, through its counsel at Blackwood Stein & Associates LLP. These discovery requests were carefully crafted to develop the factual record on the issues most critical to Nexford's defenses and Counterclaim.
The Interrogatories are designed to elicit detailed information regarding:
• The specific calculation methodology Cardinal Peak applied to each surcharge invoice during the disputed period, including the data sources, indices, and cost inputs used;
• Cardinal Peak's internal pricing policies and any deviations from the Exhibit C Surcharge Methodology, including any authorization or internal approval for the use of the "blended cost" metric;
• The exact dates on which each Surcharge Notice was prepared, approved, and delivered to Nexford, along with the method of delivery;
• The identification of all persons with knowledge of the Exhibit C methodology and its application to the disputed surcharge invoices, including any consultants, accountants, or third parties involved in the surcharge calculation process;
• The factual basis for each of Cardinal Peak's three causes of action, including the unjust enrichment claim (which we believe is subject to dismissal) and the account stated claim; and
• The basis for Cardinal Peak's contention that the surcharges invoiced were consistent with industry practice and the MSA.
The Requests for Production are designed to obtain the following categories of documents:
• All Surcharge Notices issued by Cardinal Peak during the disputed period (March 2021 through May 2022), including all attachments, cover letters, and transmittal records;
• All supporting calculations, worksheets, and internal surcharge computation documents used by Cardinal Peak to determine the amount of each surcharge invoice;
• All communications — internal and external — regarding the "blended cost" methodology, including any discussions of the decision to depart from the Exhibit C methodology;
• All Ferrous Scrap Index data (as published by Platts/SPI) and Industrial Energy Cost Index data obtained, referenced, or considered (or not obtained, referenced, or considered) by Cardinal Peak during the disputed period;
• All correspondence between Cardinal Peak and Nexford regarding surcharge disputes, including any emails, letters, meeting notes, or memoranda related to Nexford's objections to the surcharge invoices; and
• All documents relating to the unjust enrichment and account stated claims, including any internal analyses of Cardinal Peak's position regarding the propriety of those causes of action.
Under the applicable Illinois Supreme Court Rules, Cardinal Peak's responses to these discovery requests are due in late January 2023. We will monitor the response deadline closely and will not hesitate to pursue a motion to compel should Cardinal Peak's responses prove deficient or untimely.
B. Anticipated discovery Activity — Q1 2023
Cardinal Peak has also commenced its own discovery. On November 28, 2022, Blackwood Stein served Cardinal Peak's First Set of Interrogatories and First Set of Requests for Production of Documents on Nexford. We are currently in the process of preparing Nexford's responses to these discovery requests, which are due on January 9, 2023. We will be coordinating with Deborah Whitfield and the relevant Nexford personnel to gather responsive documents and ensure the accuracy and completeness of the interrogatory responses. We anticipate scheduling a document review session with your team during the first week of January to finalize these responses.
In addition, the parties are currently in the process of scheduling the first two fact depositions in the case:
Natalie Gunderson, Cardinal Peak VP, Sales & Commercial. Ms. Gunderson is identified in the Complaint and in Cardinal Peak's initial disclosures as a key witness with direct knowledge of the surcharge invoicing process, the Surcharge Notices, and Cardinal Peak's relationship with Nexford. We anticipate that her deposition will be noticed for mid-January 2023 and will take place at the offices of Calderwood & Harkness in Chicago. Our examination of Ms. Gunderson will focus on her knowledge of the Exhibit C methodology, her understanding of the "blended cost" metric, the internal approval process for the surcharge invoices, and the circumstances surrounding the late delivery of Surcharge Notices.
Russell Okonkwo, Nexford VP, Procurement. Mr. Okonkwo is Nexford's primary fact witness in this matter. He was responsible for reviewing and processing Cardinal Peak's surcharge invoices and for raising objections when Nexford identified discrepancies. We anticipate that Cardinal Peak will notice his deposition for early February 2023. We will work closely with Mr. Okonkwo to prepare him thoroughly for his deposition and will coordinate with your office to schedule preparation sessions well in advance of the deposition date. It is critically important that Mr. Okonkwo's testimony be consistent with the documentary record and with Nexford's overall litigation strategy, and we will devote significant attention to his preparation.
Additional depositions may be noticed as discovery progresses; we will keep you advised as the deposition schedule develops.
V. Expert Retention — Meridian Bridge Consulting LLC
On December 12, 2022, Calderwood & Harkness formally retained Meridian Bridge Consulting LLC to serve as Nexford's damages analysis and expert consulting firm in connection with this Litigation. Meridian Bridge is a well-regarded forensic accounting and economic consulting firm based in Chicago, and we have worked with them successfully on prior engagements involving complex contract disputes and damages analyses.
Dr. Anita Rosenthal, CPA, ABV, of Meridian Bridge Consulting LLC, located at 311 South Michigan Avenue, Suite 1500, Chicago, Illinois 60604, will serve as the lead expert consultant. Dr. Rosenthal holds a Ph.D. in Economics from the University of Chicago, is a Certified Public Accountant, and carries the Accredited in Business Valuation (ABV) credential from the American Institute of Certified Public Accountants. She has extensive experience in commercial damages analysis, contract dispute quantification, and expert testimony in state and federal courts.
Dr. Rosenthal's scope of engagement includes the following:
• Invoice-by-Invoice Analysis. Analyzing each of the fourteen (14) disputed surcharge invoices issued by Cardinal Peak during the March 2021 through May 2022 period, applying the Exhibit C Surcharge Methodology to determine the correct surcharge amount for each month.
• Methodology Comparison. Comparing Cardinal Peak's surcharge calculations — including those using the internal "blended cost" metric — against the calculations that would result from proper application of the Exhibit C Surcharge Methodology, including the published Ferrous Scrap Index (Platts/SPI) and Industrial Energy Cost Index data for each relevant month.
• Index Verification. Verifying the actual Ferrous Scrap Index and Industrial Energy Cost Index values for each month in the disputed period and determining whether Cardinal Peak's surcharge invoices are consistent with those published index values.
• Quantification of Defenses. Quantifying the dollar impact of each of Nexford's three principal defenses — late Surcharge Notices, methodology deviation, and cap exceedances — on a month-by-month basis, including identification of overlapping defense categories.
• Expert Report Preparation. Preparing a comprehensive rebuttal expert report suitable for submission in connection with dispositive motions or at trial, setting forth Dr. Rosenthal's opinions, methodology, and supporting analysis.
We anticipate that Cardinal Peak will retain its own damages expert in the coming weeks. Under the anticipated discovery schedule, expert reports are expected to be exchanged in Q1 2023, with rebuttal reports to follow approximately thirty days thereafter. We will keep you informed of any developments regarding Cardinal Peak's expert retention and the expert discovery timeline.
The engagement of Meridian Bridge Consulting LLC is subject to a separate engagement letter, a copy of which has been provided to Deborah Whitfield's office for review and execution. Dr. Rosenthal's standard hourly rate is $625 per hour, which is consistent with the rates of comparable forensic accounting experts in the Chicago market.
VI. Legal Research and Analysis
In addition to the litigation filings and discovery activity described above, Calderwood & Harkness completed several internal legal research and analysis memoranda during the period covered by this report. These memoranda have been prepared to support our litigation strategy and to provide a thorough foundation for the legal arguments we are advancing on Nexford's behalf. While these memoranda are internal work product and are not separately enclosed with this letter, we summarize their scope and conclusions below for your reference:
September 8, 2022 — Illinois Surcharge Pass-Through Law Memorandum. This research memorandum analyzes Illinois law governing surcharge pass-through provisions in commercial supply contracts, including the enforceability of condition precedent requirements (such as the notice deadline in Section 7.4(a)), waiver doctrines under Illinois contract law, and the enforceability of price-cap provisions under the Illinois Uniform Commercial Code. The memorandum concludes that Illinois courts enforce notice-as-condition-precedent provisions strictly, and that a supplier's failure to comply with a contractually specified notice deadline may bar recovery of the corresponding surcharge. The memorandum further concludes that the 12% cap provision in Section 7.4(c) is enforceable as a material term of the parties' bargain.
September 12, 2022 — MSA Section 7.4 Detailed Analysis. This memorandum provides a provision-by-provision analysis of MSA Section 7.4, including Subsections 7.4(a) through 7.4(e) and Exhibit C (Surcharge Methodology). The memorandum quantifies Nexford's exposure under each defense category on a month-by-month basis, identifies the overlap among the three defense categories, and calculates Nexford's maximum additional exposure at approximately $0.21 million. This analysis has served as the foundational document for our litigation strategy and for the engagement of Meridian Bridge Consulting.
October 15, 2022 — Unjust Enrichment Claim Analysis. This memorandum analyzes the viability of Cardinal Peak's unjust enrichment claim (Count II of the Complaint) under Illinois law. The memorandum concludes that the claim is barred as a matter of law because an express contract — the MSA — governs the precise subject matter in dispute. Under well-settled Illinois precedent, a plaintiff may not pursue an unjust enrichment theory where the parties' rights and obligations are defined by an express contract covering the same subject matter. This analysis provides a strong basis for a potential motion for summary judgment or, alternatively, for a motion to narrow the claims prior to trial.
These analyses continue to support our overall assessment that Nexford's contractual defenses are strong and well-grounded in the express terms of the MSA. The late-notice defense, which affects seven of the fourteen disputed months and accounts for approximately $2.18 million in disputed surcharges, is the single most impactful defense. The methodology deviation defense, which accounts for approximately $1.47 million, is also compelling given the clear and specific methodology prescribed by Exhibit C. Together, these defenses significantly reduce Nexford's potential exposure and provide substantial leverage in any settlement discussions.
VII. Assessment of Current Litigation Posture
Based on the developments to date, we believe Nexford is in a strong defensive position as the case enters the discovery phase. Our assessment of the current litigation posture is as follows:
Strengths:
• Counterclaim Posture. The Counterclaim survived Cardinal Peak's Motion to Dismiss, establishing Nexford as both defendant and counter-plaintiff. This dual posture strengthens Nexford's position at every stage of the litigation — in discovery, in settlement discussions, and at trial. Cardinal Peak must now defend against Nexford's affirmative claims while prosecuting its own.
• Contractual Defenses. All three of Nexford's principal affirmative defenses are well-supported by the express language of the MSA, the Exhibit C Surcharge Methodology, and the available documentation. The contractual provisions at issue are clear and unambiguous, which favors Nexford's interpretive position and reduces the risk that the Court will look beyond the four corners of the agreement.
• Unjust Enrichment Vulnerability. Cardinal Peak's unjust enrichment claim (Count II) appears highly vulnerable given the existence of the MSA governing the precise subject matter in dispute. We believe this claim can be eliminated on summary judgment, which would narrow the case and simplify the trial presentation.
• Account Stated Claim Weakness. The account stated claim (Count III) is weak on its facts. Under Illinois law, an account stated requires an agreement — express or implied — between the parties as to the correctness of the account. Nexford timely disputed the surcharge invoices within the thirty (30) day period prescribed by MSA Section 7.4(d), and Cardinal Peak cannot establish the acquiescence or agreement necessary to sustain this cause of action. We believe this claim is also subject to dismissal on summary judgment.
Risks to Monitor:
• Course of Dealing Argument. Cardinal Peak may argue that Nexford's course of dealing — specifically, the fact that Nexford paid certain surcharges calculated using the "blended cost" methodology in earlier periods that are outside the disputed timeframe — constitutes a waiver of, or implied agreement to modify, the Exhibit C Surcharge Methodology. This is the most significant risk we have identified to date. We are developing a factual and legal response to this potential argument, which will include evidence that Nexford consistently objected to the blended cost methodology in correspondence and that any payments made under that methodology were made under reservation of rights or without knowledge of the deviation. This issue will be a central focus of both the Gunderson and Okonkwo depositions and of our expert analysis.
• Surcharge Notice Delivery Dates. The factual question of whether certain Surcharge Notices were timely delivered may turn on evidence of the precise delivery dates. For some of the disputed months, the timeliness issue is clear-cut (notices were delivered weeks after the deadline), but for two or three months, the issue may be closer and will depend on documentary evidence of delivery — such as email transmission records, courier receipts, or certified mail tracking — that will be developed in discovery. We have tailored our document requests to Cardinal Peak to obtain this evidence.
Mediation. We also note that the MSA's dispute resolution clause, Section 14.3, requires mandatory mediation in Chicago before litigation may proceed to trial. The parties have not yet invoked this provision, and we recommend deferring mediation until after core fact discovery and expert report exchanges are substantially complete, so that Nexford can negotiate from a position of maximum informational advantage. We anticipate that mediation may become appropriate in Q2 or Q3 of 2023, depending on the pace of discovery.
VIII. Budget and Fee Summary
At the time Calderwood & Harkness's engagement was opened on August 22, 2022, we provided an estimated litigation budget of $200,000 to $275,000 through mediation and $350,000 to $500,000 through trial. These estimates remain our current working projections, subject to adjustment based on the scope and complexity of discovery, the number of depositions required, and any unforeseen motions or procedural developments.
The current billing rates for the primary timekeepers assigned to this matter are as follows:
Through the end of Q4 2022, total fees billed and costs incurred remain within the budgeted trajectory for the pre-discovery and early-discovery phase of the Litigation. Detailed invoices reflecting all time entries and costs have been submitted separately through Calderwood & Harkness's regular monthly billing cycle, and we understand that all invoices through the November 2022 billing cycle have been received and processed by Nexford's accounts payable department. The December 2022 invoice will be transmitted in the ordinary course in early January 2023.
We anticipate that Q1 2023 expenditures will increase relative to the Q4 2022 run rate, driven by several factors: (i) deposition costs, including court reporter fees, transcript charges, and videography (if elected); (ii) expert fees for Meridian Bridge Consulting LLC, as Dr. Rosenthal's analysis of the fourteen disputed invoices intensifies; (iii) the preparation and service of Nexford's responses to Cardinal Peak's discovery requests; and (iv) the preparation of Mr. Okonkwo and other Nexford witnesses for deposition testimony. We will continue to monitor expenditures closely and will communicate with Deborah Whitfield's office promptly if we anticipate any material deviation from the budget.
IX. Lender and Stakeholder Considerations
We call your attention to a matter that, while not currently requiring action, warrants advance planning. Under Section 6.03(b) of Nexford's $45 million revolving credit facility with Ridgecrest National Bank, N.A. (dated March 12, 2021) (the "Credit Facility"), Nexford is required to provide notice to the lender in the event that any litigation settlement exceeds $1.0 million. No settlement notice is currently required, as no settlement has been proposed or agreed upon. However, given that Cardinal Peak's claimed damages of $4.73 million significantly exceed the $1.0 million notice threshold, any settlement of this dispute — should one be negotiated — is likely to require notice under the Credit Facility. We flag this for your planning purposes so that the appropriate internal and external notifications can be coordinated in advance should settlement discussions arise in Q1 or Q2 2023.
We also understand that Diana Calloway of Marlowe Asset Management Bluff Capital Partners, LP ("Marlowe Asset Management Bluff"), continues to serve as board observer for Nexford in connection with Marlowe Asset Management Bluff's equity investment, and that Marlowe Asset Management Bluff is being kept informed of significant litigation developments as a matter of course. We have copied Ms. Calloway on this letter for that purpose. Should Marlowe Asset Management Bluff require any additional information or wish to discuss any aspect of the Litigation directly with Calderwood & Harkness, we are available to do so at your direction.
X. Next Steps and Anticipated Q1 2023 Activity
Looking ahead to the first quarter of 2023, we anticipate the following activity in connection with this Litigation:
1. Nexford's discovery Responses (Due January 9, 2023). We will complete and serve Nexford's responses to Cardinal Peak's First Set of Interrogatories and First Set of Requests for Production of Documents. We will coordinate with your team during the first week of January to finalize responsive documents and interrogatory answers.
2. Deposition of Natalie Gunderson (Anticipated January 2023). We will conduct the deposition of Natalie Gunderson, Cardinal Peak's Vice President of Sales & Commercial, who is a key fact witness with direct knowledge of the surcharge invoicing process. This deposition will focus on the Exhibit C methodology, the "blended cost" metric, and the timeliness of Surcharge Notices.
3. Preparation and Defense of Russell Okonkwo's Deposition (Anticipated February 2023). We will prepare Russell Okonkwo, Nexford's Vice President of Procurement, for his deposition and will defend the deposition when it takes place. Multiple preparation sessions will be scheduled in advance.
4. Review and Analysis of Cardinal Peak's discovery Responses. Upon receipt of Cardinal Peak's responses to Nexford's First Set of Interrogatories and Requests for Production (due in late January 2023), we will conduct a thorough review and analysis of the documents and information produced, identifying any deficiencies and preparing follow-up discovery requests or a motion to compel as warranted.
5. Expert Engagement — Meridian Bridge Consulting. We will continue our engagement with Dr. Anita Rosenthal at Meridian Bridge Consulting LLC to develop the expert damages analysis and prepare the rebuttal expert report. This work will intensify as Cardinal Peak's discovery responses are received and as the underlying surcharge data is assembled and analyzed.
6. Monitoring Cardinal Peak's Expert Retention. We will monitor for any disclosure by Cardinal Peak of its own damages expert and will evaluate the qualifications and likely testimony of any such expert once identified.
7. Mediation Timing Evaluation. We will continue to evaluate the appropriate timing for invoking the mandatory mediation provision under MSA Section 14.3, with a view toward commencing mediation after core fact discovery and expert report exchanges are substantially complete. We will discuss mediation timing with you in greater detail in our next quarterly report.
8. Q1 2023 Status Report. We will provide the next quarterly status report in March 2023, covering developments through the end of Q1 2023.
XI. Closing
We trust this report provides a comprehensive and useful overview of the current status of the Litigation and the progress achieved during Q4 2022. We are encouraged by the results to date and remain confident in the strength of Nexford's defenses and the overall litigation strategy. Please do not hesitate to contact me or any member of the Calderwood & Harkness team if you have questions, require additional information, or wish to schedule a telephone conference or in-person meeting to discuss any aspect of this report in greater detail. We are available at your convenience.
As a final reminder, this letter and its contents — including all factual summaries, legal analyses, strategic assessments, and budgetary information contained herein — are protected by the attorney-client privilege and constitute confidential attorney work product. This letter should not be shared with, disclosed to, or discussed with any person or entity outside the privileged circle — including Nexford's officers, directors, employees, lenders, auditors, or other third parties — without first consulting with Calderwood & Harkness to ensure that the privilege is not inadvertently waived. Please contact me directly if you have any questions about the scope of the privilege or the appropriate handling of this correspondence.
We look forward to continuing to represent Nexford vigorously in this matter and to providing you with our next quarterly update in March 2023.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand Partner
Direct Telephone: (312) 555-7218 Direct Facsimile: (312) 555-7219
Email: panand@calderwoodharkness.com
cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP Douglas Carmichael, Billing Partner, Calderwood & Harkness LLP
Enclosures: None (invoices transmitted separately through the firm's regular billing cycle)
ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL This letter and its contents are protected by the attorney-client privilege and the work product doctrine. Any unauthorized disclosure, copying, or distribution is strictly prohibited.
Timekeeper | Role | Rate
Priya Anand | Partner (Responsible) | $895/hr
Douglas Carmichael | Partner (Billing) | $875/hr
Simone Laroche | Senior Associate | $585/hr
Jeffrey Park | Associate | $435/hr
Paralegal Staff | Paralegal | $275/hr

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VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL

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