1005-00005 · Nexford Industrial Holdings · Engagement

engagement-letter.docx DOCUMENT Litigation

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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

August 22, 2022

VIA EMAIL AND FIRST-CLASS MAIL

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

Re: Engagement of Calderwood & Harkness LLP — Defense of Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, Circuit Court of Cook County, Illinois, County Department, Law Division

Calderwood & Harkness Matter No. 1005-00005

Dear Ms. Whitfield:

1. Introduction and Purpose

Thank you for selecting Calderwood & Harkness LLP ("Calderwood & Harkness," the "Firm," or "we") to represent Nexford Industrial Holdings Inc. ("Nexford," the "Company," or "you") in connection with the above-captioned matter. We are pleased to have the opportunity to work with you and your team and are committed to providing the highest quality legal representation.

This letter confirms that Calderwood & Harkness has been retained to serve as defense litigation counsel for Nexford in the civil action filed by Cardinal Peak Industries ("Cardinal Peak" or "Plaintiff") on August 8, 2022, in the Circuit Court of Cook County, Illinois, County Department, Law Division, and assigned Case No. 2022-L-008471 (the "Action" or the "Litigation"). As you know, the Complaint in the Action asserts claims for breach of contract (Count I), unjust enrichment (Count II), and account stated (Count III), each arising from a pricing dispute under the Master Supply Agreement between Nexford and Cardinal Peak, bearing contract designation MSA-NIH-CPI-2020-001 and dated January 15, 2020 (the "MSA"). Cardinal Peak alleges that Nexford failed to pay approximately $4.73 million in raw-material surcharges that Cardinal Peak contends were properly imposed under the MSA's pricing adjustment provisions for the period from March 2021 through May 2022.

The purpose of this letter (the "Engagement Letter") is to set forth the terms and conditions of our engagement, including the scope of our representation, the fees and costs associated with our services, and the respective responsibilities of the Firm and the Company. We ask that you review this letter carefully and, if the terms are acceptable, execute and return a copy to us as described in Section 15 below.

2. Scope of Engagement

Calderwood & Harkness is engaged to defend Nexford in the Litigation captioned Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, pending in the Circuit Court of Cook County, Illinois, County Department, Law Division. The scope of our engagement in this matter encompasses the following:

(a) Defense of Plaintiff's claims, including the claims for breach of contract, unjust enrichment, and account stated as set forth in the Complaint, and any amended or supplemental claims that may be asserted during the course of the Litigation;

(b) Evaluation and assertion of all applicable affirmative defenses on behalf of Nexford, including but not limited to defenses based on the terms of the MSA, failure of conditions precedent, waiver, estoppel, failure to mitigate, and any other defenses that may be supported by the facts and applicable law;

(c) Preparation and filing of any counterclaims against Cardinal Peak that are deemed advisable following our investigation and analysis of the relevant facts and contractual provisions;

(d) Written and oral discovery, including the preparation and service of interrogatories, requests for production of documents, and requests to admit, as well as the defense and taking of depositions of fact witnesses and, where appropriate, expert witnesses;

(e) Retention and coordination with expert witnesses, including damages experts, industry consultants, and any other specialists whose testimony or analysis may be required in connection with the defense of the Action or the prosecution of any counterclaims;

(f) Motion practice, including the preparation, filing, and argument of dispositive and non-dispositive motions, including motions to dismiss, motions for summary judgment, motions in limine, and such other motions as may be necessary or appropriate;

(g) Mediation and alternative dispute resolution ("ADR") proceedings as may be required under Section 14.3 of the MSA or as otherwise ordered by the Court, including preparation of mediation statements, participation in mediation sessions, and related negotiations;

(h) Trial preparation and trial, if necessary, including the preparation of trial briefs, jury instructions (if applicable), witness outlines, exhibit lists, and all other materials required for the presentation of Nexford's defense at trial;

(i) Settlement negotiations, including the evaluation of settlement proposals, preparation of settlement demand or response letters, negotiation of settlement terms, and documentation of any settlement reached; and

(j) Post-resolution proceedings, including the preparation and filing of stipulations of dismissal, satisfaction of any settlement terms, and related administrative matters necessary to bring the Litigation to a close.

The scope of this engagement does not include representation of Nexford in any separate or unrelated matters, regulatory proceedings, investigations, or appeals from any judgment or order entered in the Action, unless such representation is separately agreed upon in writing between the Firm and Nexford. In particular, should an appeal become necessary or advisable, we will discuss with you at that time whether Calderwood & Harkness or separate appellate counsel should handle the appeal, and the terms of any such representation will be confirmed in a supplemental engagement letter.

Any expansion of the scope of this engagement beyond the matters described above will be confirmed in a supplemental engagement letter or written amendment signed by both parties.

3. Engagement Team

We have assembled an experienced team of attorneys and professionals to handle this engagement. The following individuals have been assigned to the matter:

Priya Anand — Responsible Partner, Litigation. Ms. Anand will serve as the Responsible Partner for this engagement and will have primary relationship and supervisory responsibility over all aspects of the representation. Ms. Anand has extensive experience in complex commercial litigation, including contract disputes in the industrial supply and manufacturing sectors, and will provide strategic direction and oversight throughout the course of the Litigation. She will serve as your primary point of contact at the partner level.

Douglas Carmichael — Billing Partner, Litigation. Mr. Carmichael will have oversight of billing and budgetary matters for the engagement and will be available to address any questions or concerns regarding invoices, fee estimates, and cost management. Mr. Carmichael will also provide substantive support as needed, including participation in significant motion practice and trial preparation.

Simone Laroche — Lead Associate, Litigation. Ms. Laroche will be responsible for day-to-day case management and will take a leading role in discovery, depositions, motion practice, and brief writing. Ms. Laroche is a senior associate with significant experience in commercial litigation in Illinois state and federal courts and will serve as the primary day-to-day contact for the engagement team.

Jeffrey Park — Working Associate, Litigation. Mr. Park will provide support in legal research, document review, discovery management, and brief writing. Mr. Park has strong research and writing skills and will work closely with Ms. Laroche to ensure the efficient and thorough handling of all aspects of the case.

Paralegal Staff. Paralegal professionals will be assigned from time to time as needed to assist with document management, discovery organization, trial preparation, cite-checking, and other support functions.

From time to time, it may be necessary or efficient to assign additional attorneys or professionals to the matter, whether due to workload considerations, specialized expertise, or other factors. We will provide notice to you in the event additional personnel are assigned. Any changes in personnel at the partner level — including the substitution of the Responsible Partner or Billing Partner — will be communicated to you promptly, and we will make every effort to ensure a smooth transition.

4. Fees and Billing Rates

Calderwood & Harkness will bill for services rendered in connection with this engagement on an hourly basis. The current hourly rates for the members of the engagement team are as follows:

These rates reflect the Firm's standard rates for the respective timekeepers as of the date of this Engagement Letter. Hourly rates are subject to periodic adjustment, which typically occurs on an annual basis effective January 1 of each calendar year. In the event of any rate adjustment, the Company will be given at least thirty (30) days' advance written notice of the change, and the new rates will apply to services performed on or after the effective date of the adjustment. If additional attorneys or professionals are assigned to the matter, they will be billed at their then-current standard hourly rates, and such rates will be communicated to you at the time of assignment.

All professional time will be recorded in increments of one-tenth (0.1) of an hour (i.e., six-minute increments). The Firm will endeavor to staff the matter efficiently and to leverage associate and paralegal time where appropriate in order to manage costs without compromising the quality or effectiveness of the representation. We recognize the importance of cost control and will work collaboratively with you to ensure that the resources deployed on the matter are commensurate with the tasks at hand.

5. Estimated Budget

Based on our preliminary assessment of the case, including our review of the Complaint, the MSA, and the related correspondence you have provided to date, as well as our understanding of the procedural posture and likely trajectory of the Litigation, the Firm provides the following non-binding fee estimates for professional fees:

Through Mediation/ADR Resolution: Approximately $200,000 to $275,000 in professional fees. This estimate assumes that the case proceeds through initial pleadings, written discovery, a limited number of fact depositions, engagement of a damages consultant, and participation in a mediation or other ADR proceeding as contemplated by Section 14.3 of the MSA, culminating in a resolution at or shortly after mediation.

Through Trial (if mediation is unsuccessful): Approximately $350,000 to $500,000 in professional fees. This estimate assumes that the case does not resolve at or prior to mediation and proceeds through the completion of fact and expert discovery, summary judgment practice, pretrial preparation, and a trial of approximately five to seven days in duration.

These estimates are provided in good faith and are intended to give the Company a reasonable framework for budgeting purposes. However, they are expressly not fee caps, fixed fees, or guarantees of the total cost of the engagement. Actual fees will depend on a number of factors that cannot be predicted with certainty at this stage, including, without limitation, the overall complexity and duration of the Litigation; the scope and volume of discovery, including electronically stored information; the conduct and litigation strategy of opposing counsel, Blackwood Stein & Associates LLP; the number and nature of motions filed by either party; the extent of expert discovery and testimony required; the number and duration of depositions; and the length and complexity of trial preparation and trial itself.

The estimates set forth above do not include costs and disbursements, which are addressed separately in Section 6 below.

The Firm will provide periodic updates to the Company regarding actual fees incurred relative to the budget estimates. We will promptly notify you if circumstances arise that suggest fees may materially exceed the estimated ranges, and we will discuss with you any adjustments to litigation strategy or staffing that may be appropriate to manage costs.

6. Costs and Disbursements

In addition to professional fees for legal services, the Company will be responsible for reimbursement of all reasonable costs and disbursements incurred by the Firm in connection with the engagement. These costs are separate from and in addition to the Firm's professional fees and will be billed to the Company as incurred.

Typical costs and disbursements that may be incurred in a matter of this nature include, but are not limited to, the following:

• Court filing fees and service of process charges;

• Court reporter fees and deposition transcript costs;

• Expert witness fees and expenses, including fees charged by Meridian Bridge Consulting LLC or other retained consultants and experts for their time, analysis, report preparation, and testimony;

• Mediator fees and ADR-related expenses, including fees of the Great Lakes Dispute Resolution Center or any mediator selected by the parties or appointed by the Court;

• Photocopying, printing, and document production costs;

• Electronic discovery hosting, processing, and review platform fees;

• Travel expenses, including airfare, ground transportation, lodging, and meals incurred in connection with depositions, court appearances, mediations, and other case-related travel;

• Messenger and overnight delivery charges;

• Computerized legal research charges (e.g., Westmark Data Systems, Sundial Solutions, PACER, and similar services); and

• Any other out-of-pocket expenses reasonably incurred in furtherance of the representation.

With respect to any individual cost or disbursement expected to exceed $5,000, the Firm will discuss the anticipated expenditure with the Company in advance where practicable and seek the Company's approval before the expense is incurred. We recognize, however, that in certain time-sensitive situations it may not be feasible to obtain advance approval, and in such cases we will inform you of the expense as promptly as possible.

All costs and disbursements will be reflected on the monthly invoices described in Section 7 below.

7. Billing and Payment Terms

The Firm will issue monthly invoices to the Company reflecting the professional fees and costs incurred during the preceding calendar month. Invoices will typically be issued within the first fifteen (15) business days of the month following the month in which the services were performed or costs were incurred.

Each invoice will contain reasonable detail regarding the nature of the services performed, including the identity of the timekeeper, the date of service, the hours expended (in one-tenth of an hour increments), a narrative description of the work performed, and an itemization of disbursements. The Firm endeavors to provide invoices that are transparent and informative so that the Company can readily evaluate the services provided and the associated charges.

Invoices are due and payable within thirty (30) days of the invoice date. Payment should be made by check payable to "Calderwood & Harkness LLP" and mailed to the Firm's address set forth above, or by wire transfer to the Firm's operating account using the wire instructions that will be provided under separate cover.

Any inquiries, questions, or disputes regarding invoices should be directed to Douglas Carmichael, Billing Partner, at (312) 555-7218 or dcarmichael@calderwoodharkness.com. We encourage the Company to raise any billing concerns promptly so that they may be addressed in a timely manner.

The Firm reserves the right to charge interest on past-due balances at a rate of one percent (1.0%) per month (twelve percent (12%) per annum), or the maximum rate permitted by applicable law, whichever is less. Interest will accrue on any unpaid balance beginning on the thirty-first (31st) day following the invoice date and will continue to accrue until the balance is paid in full.

An initial retainer deposit is not required for this engagement. The Firm reserves the right to request a retainer or evergreen deposit in the future if circumstances warrant, in which case the terms of any such arrangement will be discussed with the Company and confirmed in writing.

8. Client Responsibilities

The effectiveness of our representation depends in significant part on the cooperation and active participation of the Company. Accordingly, Nexford agrees to the following:

(a) Cooperation and Information. Nexford will cooperate fully with the engagement team throughout the course of the representation, including the timely provision of documents, data, information, and access to Company personnel as reasonably requested by the Firm. Prompt and complete responses to the Firm's requests for information are essential, particularly during discovery, where delays in gathering and producing documents can result in sanctions, adverse inferences, or other prejudice to the Company's defense.

(b) Primary Client Contact. Nexford designates Deborah Whitfield, General Counsel, as the primary client contact for day-to-day communications with the Firm. Ms. Whitfield will serve as the principal conduit for information between the Company and the engagement team and will be responsible for coordinating internal resources to support the Litigation. The Firm understands that Martin Schaeffer (Chief Executive Officer) and Lydia Tran (Chief Financial Officer) may also be involved in strategic decisions, including decisions regarding settlement authority, and the Firm will communicate with Mr. Schaeffer and Ms. Tran as appropriate and as directed by Ms. Whitfield.

(c) Equity Sponsor Participation. The Firm understands that Marlowe Asset Management Bluff Capital Partners, LP ("Marlowe Asset Management Bluff"), as Nexford's majority equity sponsor, may participate in litigation strategy discussions and settlement deliberations through its designated representative, Diana Calloway, Principal and Board Observer. The Firm is prepared to include Ms. Calloway in such discussions as directed by the Company. However, the attorney-client relationship in this engagement is between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. only. Marlowe Asset Management Bluff Capital Partners, LP, Marlowe Asset Management Bluff Capital Management LLC, and their respective affiliates, partners, and personnel are not clients of the Firm in connection with this engagement, and the Firm owes no duties to Marlowe Asset Management Bluff or any of its affiliates except as may arise from the attorney-client relationship with Nexford. To the extent that communications with Ms. Calloway or other Marlowe Asset Management Bluff personnel involve privileged or confidential information, the parties will work together to ensure that appropriate common-interest or joint-defense protections are in place.

(d) Litigation Hold. Nexford will promptly implement and maintain a litigation hold on all documents and electronically stored information ("ESI") that are or may be relevant to the dispute with Cardinal Peak, the MSA, and the claims and defenses at issue in the Litigation. The obligation to preserve relevant materials extends to all forms of documents and ESI, including emails, electronic files, databases, text messages, voicemails, and hard-copy documents, in the possession, custody, or control of Nexford and its officers, employees, and agents. The Firm will issue a separate, detailed litigation hold notice and will work with the Company's information technology and records management personnel to ensure that the hold is properly implemented and maintained throughout the pendency of the Litigation.

9. Conflicts of Interest

The Firm has conducted a conflicts-of-interest check as of August 21, 2022, in accordance with its standard procedures and its obligations under the Illinois Rules of Professional Conduct. Based on that review, the Firm has identified no conflicts of interest that would preclude or materially limit the Firm's representation of Nexford in this matter.

The conflicts check encompassed the following parties and their known affiliates:

• Nexford Industrial Holdings Inc. and its officers, directors, and subsidiaries;

• Cardinal Peak Industries and its known principals;

• Blackwood Stein & Associates LLP (counsel for Cardinal Peak);

• Marlowe Asset Management Bluff Capital Partners, LP and Marlowe Asset Management Bluff Capital Management LLC;

• Ridgecrest National Bank, N.A. (identified as Nexford's primary lender);

• Hargrove Kellner CPAs LLP (identified as Nexford's independent auditor); and

• Key individuals identified to date in connection with the Litigation, including the individuals named in this Engagement Letter.

In the event that a conflict of interest arises during the course of the engagement — whether due to changes in the parties, the issues, or the Firm's other client relationships — the Firm will promptly notify the Company and discuss appropriate steps to address the conflict. Depending on the nature and severity of the conflict, such steps may include obtaining an informed written waiver of the conflict from the affected parties or, if the conflict cannot be waived or resolved, withdrawal from the engagement in accordance with Section 11 below.

Nexford acknowledges that Calderwood & Harkness is a full-service law firm with a diverse client base, and that the Firm may represent other clients in matters wholly unrelated to this engagement that may involve parties or entities whose interests are adverse to Nexford in those unrelated contexts. This engagement does not preclude the Firm from undertaking or continuing such representations, provided that such representations do not create a direct, material conflict of interest with respect to the subject matter of this engagement. Should you have any questions or concerns about the Firm's conflicts policies, please do not hesitate to raise them with Ms. Anand.

10. Confidentiality and Privilege

All communications between Calderwood & Harkness and Nexford in connection with this engagement are intended to be protected by the attorney-client privilege and, where applicable, the work product doctrine. The Firm takes the protection of client confidences and privileged communications seriously and will maintain the confidentiality of all client information in accordance with its professional obligations under the Illinois Rules of Professional Conduct, including Rule 1.6.

We ask that Nexford likewise take care to preserve the privileged nature of communications related to this engagement. In particular, the Company should limit the distribution of legal advice, strategy memoranda, case assessments, and other privileged communications to those individuals within the organization who have a genuine need to know the information in order to fulfill their responsibilities in connection with the Litigation. Privileged communications should not be forwarded to or shared with individuals outside the Company without prior consultation with the Firm, as the inadvertent disclosure of privileged information to third parties can result in a waiver of the privilege.

To the extent that the common-interest privilege or a joint-defense arrangement applies to communications shared with Marlowe Asset Management Bluff Capital Partners, LP or its representatives (including Ms. Calloway), the Firm recommends that the parties consider entering into a formal common-interest or joint-defense agreement to memorialize the terms under which privileged information may be shared without waiver. The Firm is prepared to assist in the preparation of such an agreement if desired.

11. Termination of Engagement

Either party may terminate this engagement upon written notice to the other party. The right of termination is subject to the following terms:

(a) Termination by the Client. The Company may terminate this engagement at any time and for any reason by providing written notice to the Firm. Upon termination by the Company, the Company will be responsible for payment of all fees earned and costs incurred through the date of termination, including any fees and costs reflected on invoices issued but not yet paid as of the termination date. The Firm will cooperate in the orderly transition of the matter to successor counsel designated by the Company.

(b) Termination by the Firm. The Firm may terminate this engagement by providing reasonable written notice to the Company. The Firm's right to withdraw from the representation is subject to the applicable provisions of the Illinois Rules of Professional Conduct and the rules of the Circuit Court of Cook County. Upon termination by the Firm, the Firm will take reasonable steps to protect the Company's interests, including providing reasonable advance notice of the withdrawal, cooperating in the transition of the matter to successor counsel, and seeking leave to withdraw from any pending court proceedings in accordance with applicable court rules and procedures.

(c) Return of Files. Upon the conclusion or termination of the engagement, the Firm will return original client documents to the Company upon request. The Firm will retain its own internal files, including attorney work product, notes, and internal memoranda, in accordance with the Firm's document retention policies, which generally provide for the retention of closed matter files for a period of ten (10) years following the conclusion of the engagement, after which files may be destroyed in the ordinary course without further notice to the Company.

12. Governing Law

This Engagement Letter and the relationship between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflict of laws principles. Any dispute arising out of or relating to this Engagement Letter or the Firm's representation of the Company shall be resolved exclusively in the state or federal courts located in Cook County, Illinois, and each party hereby consents to the personal jurisdiction and venue of such courts.

13. No Guarantee of Outcome

While the Firm will exercise its best professional judgment and devote diligent efforts to the defense of Nexford in this matter, no attorney can guarantee a particular outcome in any legal proceeding. The Firm has not made, and does not hereby make, any representations, promises, or guarantees regarding the outcome of the Litigation, the likelihood of success on any particular claim or defense, or the amount of any potential recovery, liability, or settlement. Any opinions or assessments provided by the Firm regarding the merits of the case or potential outcomes are expressions of professional judgment only and should not be construed as guarantees or assurances of any kind.

14. Entire Agreement; Amendment

This Engagement Letter constitutes the entire agreement between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. with respect to the terms and conditions of the Firm's engagement in the above-captioned matter. This letter supersedes all prior discussions, negotiations, correspondence, and understandings, whether written or oral, between the parties relating to the subject matter hereof.

This Engagement Letter may be amended, modified, or supplemented only by a written instrument signed by both Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. No oral modification, waiver, or amendment shall be effective unless reduced to writing and signed by both parties.

15. Acceptance

We are enthusiastic about this engagement and look forward to working with you, Mr. Schaeffer, Ms. Tran, and the entire Nexford team to achieve the best possible result in this matter. If the terms of this Engagement Letter are acceptable, please indicate your agreement by signing in the space provided below and returning a countersigned copy of this letter to Priya Anand at the Firm's address set forth above, or via email at panand@calderwoodharkness.com. We ask that the countersigned copy be returned within ten (10) business days of the date of this letter.

In the meantime, we intend to begin working on the matter immediately, including reviewing the Complaint and related filings, analyzing the MSA, and preparing the initial case assessment and defense strategy. If you have any questions about this letter or any other aspect of the engagement, please do not hesitate to contact Ms. Anand at (312) 555-7210.

Thank you again for your confidence in Calderwood & Harkness LLP. We are honored to serve as Nexford's counsel in this important matter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand Partner

Date: ________

AGREED AND ACCEPTED BY NEXFORD INDUSTRIAL HOLDINGS INC.

By: ________

Name: Deborah Whitfield

Title: General Counsel

Date: ________

Enclosures: None (Litigation hold notice to follow under separate cover)

cc: Martin Schaeffer, Chief Executive Officer, Nexford Industrial Holdings Inc. cc: Lydia Tran, Chief Financial Officer, Nexford Industrial Holdings Inc. cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP cc: Douglas Carmichael, Partner, Calderwood & Harkness LLP

Timekeeper	Role	Hourly Rate
Priya Anand	Partner	$895.00/hr
Douglas Carmichael	Partner	$875.00/hr
Simone Laroche	Senior Associate	$585.00/hr
Jeffrey Park	Associate	$435.00/hr
Paralegal staff	Paralegal	$275.00/hr

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
August 22, 2022
VIA EMAIL AND FIRST-CLASS MAIL
Deborah Whitfield, Esq. General Counsel Nexford Industrial Holdings Inc. 4200 West Lakeshore Industrial Parkway, Suite 300 Waukegan, Illinois 60085
Re: Engagement of Calderwood & Harkness LLP — Defense of Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, Circuit Court of Cook County, Illinois, County Department, Law Division
Calderwood & Harkness Matter No. 1005-00005
Dear Ms. Whitfield:
1. Introduction and Purpose
Thank you for selecting Calderwood & Harkness LLP ("Calderwood & Harkness," the "Firm," or "we") to represent Nexford Industrial Holdings Inc. ("Nexford," the "Company," or "you") in connection with the above-captioned matter. We are pleased to have the opportunity to work with you and your team and are committed to providing the highest quality legal representation.
This letter confirms that Calderwood & Harkness has been retained to serve as defense litigation counsel for Nexford in the civil action filed by Cardinal Peak Industries ("Cardinal Peak" or "Plaintiff") on August 8, 2022, in the Circuit Court of Cook County, Illinois, County Department, Law Division, and assigned Case No. 2022-L-008471 (the "Action" or the "Litigation"). As you know, the Complaint in the Action asserts claims for breach of contract (Count I), unjust enrichment (Count II), and account stated (Count III), each arising from a pricing dispute under the Master Supply Agreement between Nexford and Cardinal Peak, bearing contract designation MSA-NIH-CPI-2020-001 and dated January 15, 2020 (the "MSA"). Cardinal Peak alleges that Nexford failed to pay approximately $4.73 million in raw-material surcharges that Cardinal Peak contends were properly imposed under the MSA's pricing adjustment provisions for the period from March 2021 through May 2022.
The purpose of this letter (the "Engagement Letter") is to set forth the terms and conditions of our engagement, including the scope of our representation, the fees and costs associated with our services, and the respective responsibilities of the Firm and the Company. We ask that you review this letter carefully and, if the terms are acceptable, execute and return a copy to us as described in Section 15 below.
2. Scope of Engagement
Calderwood & Harkness is engaged to defend Nexford in the Litigation captioned Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, pending in the Circuit Court of Cook County, Illinois, County Department, Law Division. The scope of our engagement in this matter encompasses the following:
(a) Defense of Plaintiff's claims, including the claims for breach of contract, unjust enrichment, and account stated as set forth in the Complaint, and any amended or supplemental claims that may be asserted during the course of the Litigation;
(b) Evaluation and assertion of all applicable affirmative defenses on behalf of Nexford, including but not limited to defenses based on the terms of the MSA, failure of conditions precedent, waiver, estoppel, failure to mitigate, and any other defenses that may be supported by the facts and applicable law;
(c) Preparation and filing of any counterclaims against Cardinal Peak that are deemed advisable following our investigation and analysis of the relevant facts and contractual provisions;
(d) Written and oral discovery, including the preparation and service of interrogatories, requests for production of documents, and requests to admit, as well as the defense and taking of depositions of fact witnesses and, where appropriate, expert witnesses;
(e) Retention and coordination with expert witnesses, including damages experts, industry consultants, and any other specialists whose testimony or analysis may be required in connection with the defense of the Action or the prosecution of any counterclaims;
(f) Motion practice, including the preparation, filing, and argument of dispositive and non-dispositive motions, including motions to dismiss, motions for summary judgment, motions in limine, and such other motions as may be necessary or appropriate;
(g) Mediation and alternative dispute resolution ("ADR") proceedings as may be required under Section 14.3 of the MSA or as otherwise ordered by the Court, including preparation of mediation statements, participation in mediation sessions, and related negotiations;
(h) Trial preparation and trial, if necessary, including the preparation of trial briefs, jury instructions (if applicable), witness outlines, exhibit lists, and all other materials required for the presentation of Nexford's defense at trial;
(i) Settlement negotiations, including the evaluation of settlement proposals, preparation of settlement demand or response letters, negotiation of settlement terms, and documentation of any settlement reached; and
(j) Post-resolution proceedings, including the preparation and filing of stipulations of dismissal, satisfaction of any settlement terms, and related administrative matters necessary to bring the Litigation to a close.
The scope of this engagement does not include representation of Nexford in any separate or unrelated matters, regulatory proceedings, investigations, or appeals from any judgment or order entered in the Action, unless such representation is separately agreed upon in writing between the Firm and Nexford. In particular, should an appeal become necessary or advisable, we will discuss with you at that time whether Calderwood & Harkness or separate appellate counsel should handle the appeal, and the terms of any such representation will be confirmed in a supplemental engagement letter.
Any expansion of the scope of this engagement beyond the matters described above will be confirmed in a supplemental engagement letter or written amendment signed by both parties.
3. Engagement Team
We have assembled an experienced team of attorneys and professionals to handle this engagement. The following individuals have been assigned to the matter:
Priya Anand — Responsible Partner, Litigation. Ms. Anand will serve as the Responsible Partner for this engagement and will have primary relationship and supervisory responsibility over all aspects of the representation. Ms. Anand has extensive experience in complex commercial litigation, including contract disputes in the industrial supply and manufacturing sectors, and will provide strategic direction and oversight throughout the course of the Litigation. She will serve as your primary point of contact at the partner level.
Douglas Carmichael — Billing Partner, Litigation. Mr. Carmichael will have oversight of billing and budgetary matters for the engagement and will be available to address any questions or concerns regarding invoices, fee estimates, and cost management. Mr. Carmichael will also provide substantive support as needed, including participation in significant motion practice and trial preparation.
Simone Laroche — Lead Associate, Litigation. Ms. Laroche will be responsible for day-to-day case management and will take a leading role in discovery, depositions, motion practice, and brief writing. Ms. Laroche is a senior associate with significant experience in commercial litigation in Illinois state and federal courts and will serve as the primary day-to-day contact for the engagement team.
Jeffrey Park — Working Associate, Litigation. Mr. Park will provide support in legal research, document review, discovery management, and brief writing. Mr. Park has strong research and writing skills and will work closely with Ms. Laroche to ensure the efficient and thorough handling of all aspects of the case.
Paralegal Staff. Paralegal professionals will be assigned from time to time as needed to assist with document management, discovery organization, trial preparation, cite-checking, and other support functions.
From time to time, it may be necessary or efficient to assign additional attorneys or professionals to the matter, whether due to workload considerations, specialized expertise, or other factors. We will provide notice to you in the event additional personnel are assigned. Any changes in personnel at the partner level — including the substitution of the Responsible Partner or Billing Partner — will be communicated to you promptly, and we will make every effort to ensure a smooth transition.
4. Fees and Billing Rates
Calderwood & Harkness will bill for services rendered in connection with this engagement on an hourly basis. The current hourly rates for the members of the engagement team are as follows:
These rates reflect the Firm's standard rates for the respective timekeepers as of the date of this Engagement Letter. Hourly rates are subject to periodic adjustment, which typically occurs on an annual basis effective January 1 of each calendar year. In the event of any rate adjustment, the Company will be given at least thirty (30) days' advance written notice of the change, and the new rates will apply to services performed on or after the effective date of the adjustment. If additional attorneys or professionals are assigned to the matter, they will be billed at their then-current standard hourly rates, and such rates will be communicated to you at the time of assignment.
All professional time will be recorded in increments of one-tenth (0.1) of an hour (i.e., six-minute increments). The Firm will endeavor to staff the matter efficiently and to leverage associate and paralegal time where appropriate in order to manage costs without compromising the quality or effectiveness of the representation. We recognize the importance of cost control and will work collaboratively with you to ensure that the resources deployed on the matter are commensurate with the tasks at hand.
5. Estimated Budget
Based on our preliminary assessment of the case, including our review of the Complaint, the MSA, and the related correspondence you have provided to date, as well as our understanding of the procedural posture and likely trajectory of the Litigation, the Firm provides the following non-binding fee estimates for professional fees:
Through Mediation/ADR Resolution: Approximately $200,000 to $275,000 in professional fees. This estimate assumes that the case proceeds through initial pleadings, written discovery, a limited number of fact depositions, engagement of a damages consultant, and participation in a mediation or other ADR proceeding as contemplated by Section 14.3 of the MSA, culminating in a resolution at or shortly after mediation.
Through Trial (if mediation is unsuccessful): Approximately $350,000 to $500,000 in professional fees. This estimate assumes that the case does not resolve at or prior to mediation and proceeds through the completion of fact and expert discovery, summary judgment practice, pretrial preparation, and a trial of approximately five to seven days in duration.
These estimates are provided in good faith and are intended to give the Company a reasonable framework for budgeting purposes. However, they are expressly not fee caps, fixed fees, or guarantees of the total cost of the engagement. Actual fees will depend on a number of factors that cannot be predicted with certainty at this stage, including, without limitation, the overall complexity and duration of the Litigation; the scope and volume of discovery, including electronically stored information; the conduct and litigation strategy of opposing counsel, Blackwood Stein & Associates LLP; the number and nature of motions filed by either party; the extent of expert discovery and testimony required; the number and duration of depositions; and the length and complexity of trial preparation and trial itself.
The estimates set forth above do not include costs and disbursements, which are addressed separately in Section 6 below.
The Firm will provide periodic updates to the Company regarding actual fees incurred relative to the budget estimates. We will promptly notify you if circumstances arise that suggest fees may materially exceed the estimated ranges, and we will discuss with you any adjustments to litigation strategy or staffing that may be appropriate to manage costs.
6. Costs and Disbursements
In addition to professional fees for legal services, the Company will be responsible for reimbursement of all reasonable costs and disbursements incurred by the Firm in connection with the engagement. These costs are separate from and in addition to the Firm's professional fees and will be billed to the Company as incurred.
Typical costs and disbursements that may be incurred in a matter of this nature include, but are not limited to, the following:
•  Court filing fees and service of process charges;
•  Court reporter fees and deposition transcript costs;
•  Expert witness fees and expenses, including fees charged by Meridian Bridge Consulting LLC or other retained consultants and experts for their time, analysis, report preparation, and testimony;
•  Mediator fees and ADR-related expenses, including fees of the Great Lakes Dispute Resolution Center or any mediator selected by the parties or appointed by the Court;
•  Photocopying, printing, and document production costs;
•  Electronic discovery hosting, processing, and review platform fees;
•  Travel expenses, including airfare, ground transportation, lodging, and meals incurred in connection with depositions, court appearances, mediations, and other case-related travel;
•  Messenger and overnight delivery charges;
•  Computerized legal research charges (e.g., Westmark Data Systems, Sundial Solutions, PACER, and similar services); and
•  Any other out-of-pocket expenses reasonably incurred in furtherance of the representation.
With respect to any individual cost or disbursement expected to exceed $5,000, the Firm will discuss the anticipated expenditure with the Company in advance where practicable and seek the Company's approval before the expense is incurred. We recognize, however, that in certain time-sensitive situations it may not be feasible to obtain advance approval, and in such cases we will inform you of the expense as promptly as possible.
All costs and disbursements will be reflected on the monthly invoices described in Section 7 below.
7. Billing and Payment Terms
The Firm will issue monthly invoices to the Company reflecting the professional fees and costs incurred during the preceding calendar month. Invoices will typically be issued within the first fifteen (15) business days of the month following the month in which the services were performed or costs were incurred.
Each invoice will contain reasonable detail regarding the nature of the services performed, including the identity of the timekeeper, the date of service, the hours expended (in one-tenth of an hour increments), a narrative description of the work performed, and an itemization of disbursements. The Firm endeavors to provide invoices that are transparent and informative so that the Company can readily evaluate the services provided and the associated charges.
Invoices are due and payable within thirty (30) days of the invoice date. Payment should be made by check payable to "Calderwood & Harkness LLP" and mailed to the Firm's address set forth above, or by wire transfer to the Firm's operating account using the wire instructions that will be provided under separate cover.
Any inquiries, questions, or disputes regarding invoices should be directed to Douglas Carmichael, Billing Partner, at (312) 555-7218 or dcarmichael@calderwoodharkness.com. We encourage the Company to raise any billing concerns promptly so that they may be addressed in a timely manner.
The Firm reserves the right to charge interest on past-due balances at a rate of one percent (1.0%) per month (twelve percent (12%) per annum), or the maximum rate permitted by applicable law, whichever is less. Interest will accrue on any unpaid balance beginning on the thirty-first (31st) day following the invoice date and will continue to accrue until the balance is paid in full.
An initial retainer deposit is not required for this engagement. The Firm reserves the right to request a retainer or evergreen deposit in the future if circumstances warrant, in which case the terms of any such arrangement will be discussed with the Company and confirmed in writing.
8. Client Responsibilities
The effectiveness of our representation depends in significant part on the cooperation and active participation of the Company. Accordingly, Nexford agrees to the following:
(a) Cooperation and Information. Nexford will cooperate fully with the engagement team throughout the course of the representation, including the timely provision of documents, data, information, and access to Company personnel as reasonably requested by the Firm. Prompt and complete responses to the Firm's requests for information are essential, particularly during discovery, where delays in gathering and producing documents can result in sanctions, adverse inferences, or other prejudice to the Company's defense.
(b) Primary Client Contact. Nexford designates Deborah Whitfield, General Counsel, as the primary client contact for day-to-day communications with the Firm. Ms. Whitfield will serve as the principal conduit for information between the Company and the engagement team and will be responsible for coordinating internal resources to support the Litigation. The Firm understands that Martin Schaeffer (Chief Executive Officer) and Lydia Tran (Chief Financial Officer) may also be involved in strategic decisions, including decisions regarding settlement authority, and the Firm will communicate with Mr. Schaeffer and Ms. Tran as appropriate and as directed by Ms. Whitfield.
(c) Equity Sponsor Participation. The Firm understands that Marlowe Asset Management Bluff Capital Partners, LP ("Marlowe Asset Management Bluff"), as Nexford's majority equity sponsor, may participate in litigation strategy discussions and settlement deliberations through its designated representative, Diana Calloway, Principal and Board Observer. The Firm is prepared to include Ms. Calloway in such discussions as directed by the Company. However, the attorney-client relationship in this engagement is between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. only. Marlowe Asset Management Bluff Capital Partners, LP, Marlowe Asset Management Bluff Capital Management LLC, and their respective affiliates, partners, and personnel are not clients of the Firm in connection with this engagement, and the Firm owes no duties to Marlowe Asset Management Bluff or any of its affiliates except as may arise from the attorney-client relationship with Nexford. To the extent that communications with Ms. Calloway or other Marlowe Asset Management Bluff personnel involve privileged or confidential information, the parties will work together to ensure that appropriate common-interest or joint-defense protections are in place.
(d) Litigation Hold. Nexford will promptly implement and maintain a litigation hold on all documents and electronically stored information ("ESI") that are or may be relevant to the dispute with Cardinal Peak, the MSA, and the claims and defenses at issue in the Litigation. The obligation to preserve relevant materials extends to all forms of documents and ESI, including emails, electronic files, databases, text messages, voicemails, and hard-copy documents, in the possession, custody, or control of Nexford and its officers, employees, and agents. The Firm will issue a separate, detailed litigation hold notice and will work with the Company's information technology and records management personnel to ensure that the hold is properly implemented and maintained throughout the pendency of the Litigation.
9. Conflicts of Interest
The Firm has conducted a conflicts-of-interest check as of August 21, 2022, in accordance with its standard procedures and its obligations under the Illinois Rules of Professional Conduct. Based on that review, the Firm has identified no conflicts of interest that would preclude or materially limit the Firm's representation of Nexford in this matter.
The conflicts check encompassed the following parties and their known affiliates:
•  Nexford Industrial Holdings Inc. and its officers, directors, and subsidiaries;
•  Cardinal Peak Industries and its known principals;
•  Blackwood Stein & Associates LLP (counsel for Cardinal Peak);
•  Marlowe Asset Management Bluff Capital Partners, LP and Marlowe Asset Management Bluff Capital Management LLC;
•  Ridgecrest National Bank, N.A. (identified as Nexford's primary lender);
•  Hargrove Kellner CPAs LLP (identified as Nexford's independent auditor); and
•  Key individuals identified to date in connection with the Litigation, including the individuals named in this Engagement Letter.
In the event that a conflict of interest arises during the course of the engagement — whether due to changes in the parties, the issues, or the Firm's other client relationships — the Firm will promptly notify the Company and discuss appropriate steps to address the conflict. Depending on the nature and severity of the conflict, such steps may include obtaining an informed written waiver of the conflict from the affected parties or, if the conflict cannot be waived or resolved, withdrawal from the engagement in accordance with Section 11 below.
Nexford acknowledges that Calderwood & Harkness is a full-service law firm with a diverse client base, and that the Firm may represent other clients in matters wholly unrelated to this engagement that may involve parties or entities whose interests are adverse to Nexford in those unrelated contexts. This engagement does not preclude the Firm from undertaking or continuing such representations, provided that such representations do not create a direct, material conflict of interest with respect to the subject matter of this engagement. Should you have any questions or concerns about the Firm's conflicts policies, please do not hesitate to raise them with Ms. Anand.
10. Confidentiality and Privilege
All communications between Calderwood & Harkness and Nexford in connection with this engagement are intended to be protected by the attorney-client privilege and, where applicable, the work product doctrine. The Firm takes the protection of client confidences and privileged communications seriously and will maintain the confidentiality of all client information in accordance with its professional obligations under the Illinois Rules of Professional Conduct, including Rule 1.6.
We ask that Nexford likewise take care to preserve the privileged nature of communications related to this engagement. In particular, the Company should limit the distribution of legal advice, strategy memoranda, case assessments, and other privileged communications to those individuals within the organization who have a genuine need to know the information in order to fulfill their responsibilities in connection with the Litigation. Privileged communications should not be forwarded to or shared with individuals outside the Company without prior consultation with the Firm, as the inadvertent disclosure of privileged information to third parties can result in a waiver of the privilege.
To the extent that the common-interest privilege or a joint-defense arrangement applies to communications shared with Marlowe Asset Management Bluff Capital Partners, LP or its representatives (including Ms. Calloway), the Firm recommends that the parties consider entering into a formal common-interest or joint-defense agreement to memorialize the terms under which privileged information may be shared without waiver. The Firm is prepared to assist in the preparation of such an agreement if desired.
11. Termination of Engagement
Either party may terminate this engagement upon written notice to the other party. The right of termination is subject to the following terms:
(a) Termination by the Client. The Company may terminate this engagement at any time and for any reason by providing written notice to the Firm. Upon termination by the Company, the Company will be responsible for payment of all fees earned and costs incurred through the date of termination, including any fees and costs reflected on invoices issued but not yet paid as of the termination date. The Firm will cooperate in the orderly transition of the matter to successor counsel designated by the Company.
(b) Termination by the Firm. The Firm may terminate this engagement by providing reasonable written notice to the Company. The Firm's right to withdraw from the representation is subject to the applicable provisions of the Illinois Rules of Professional Conduct and the rules of the Circuit Court of Cook County. Upon termination by the Firm, the Firm will take reasonable steps to protect the Company's interests, including providing reasonable advance notice of the withdrawal, cooperating in the transition of the matter to successor counsel, and seeking leave to withdraw from any pending court proceedings in accordance with applicable court rules and procedures.
(c) Return of Files. Upon the conclusion or termination of the engagement, the Firm will return original client documents to the Company upon request. The Firm will retain its own internal files, including attorney work product, notes, and internal memoranda, in accordance with the Firm's document retention policies, which generally provide for the retention of closed matter files for a period of ten (10) years following the conclusion of the engagement, after which files may be destroyed in the ordinary course without further notice to the Company.
12. Governing Law
This Engagement Letter and the relationship between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflict of laws principles. Any dispute arising out of or relating to this Engagement Letter or the Firm's representation of the Company shall be resolved exclusively in the state or federal courts located in Cook County, Illinois, and each party hereby consents to the personal jurisdiction and venue of such courts.
13. No Guarantee of Outcome
While the Firm will exercise its best professional judgment and devote diligent efforts to the defense of Nexford in this matter, no attorney can guarantee a particular outcome in any legal proceeding. The Firm has not made, and does not hereby make, any representations, promises, or guarantees regarding the outcome of the Litigation, the likelihood of success on any particular claim or defense, or the amount of any potential recovery, liability, or settlement. Any opinions or assessments provided by the Firm regarding the merits of the case or potential outcomes are expressions of professional judgment only and should not be construed as guarantees or assurances of any kind.
14. Entire Agreement; Amendment
This Engagement Letter constitutes the entire agreement between Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. with respect to the terms and conditions of the Firm's engagement in the above-captioned matter. This letter supersedes all prior discussions, negotiations, correspondence, and understandings, whether written or oral, between the parties relating to the subject matter hereof.
This Engagement Letter may be amended, modified, or supplemented only by a written instrument signed by both Calderwood & Harkness LLP and Nexford Industrial Holdings Inc. No oral modification, waiver, or amendment shall be effective unless reduced to writing and signed by both parties.
15. Acceptance
We are enthusiastic about this engagement and look forward to working with you, Mr. Schaeffer, Ms. Tran, and the entire Nexford team to achieve the best possible result in this matter. If the terms of this Engagement Letter are acceptable, please indicate your agreement by signing in the space provided below and returning a countersigned copy of this letter to Priya Anand at the Firm's address set forth above, or via email at panand@calderwoodharkness.com. We ask that the countersigned copy be returned within ten (10) business days of the date of this letter.
In the meantime, we intend to begin working on the matter immediately, including reviewing the Complaint and related filings, analyzing the MSA, and preparing the initial case assessment and defense strategy. If you have any questions about this letter or any other aspect of the engagement, please do not hesitate to contact Ms. Anand at (312) 555-7210.
Thank you again for your confidence in Calderwood & Harkness LLP. We are honored to serve as Nexford's counsel in this important matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand Partner
Date: ________
AGREED AND ACCEPTED BY NEXFORD INDUSTRIAL HOLDINGS INC.
By: ________
Name: Deborah Whitfield
Title: General Counsel
Date: ________
Enclosures: None (Litigation hold notice to follow under separate cover)
cc: Martin Schaeffer, Chief Executive Officer, Nexford Industrial Holdings Inc. cc: Lydia Tran, Chief Financial Officer, Nexford Industrial Holdings Inc. cc: Diana Calloway, Principal, Marlowe Asset Management Bluff Capital Partners, LP cc: Douglas Carmichael, Partner, Calderwood & Harkness LLP
Timekeeper | Role | Hourly Rate
Priya Anand | Partner | $895.00/hr
Douglas Carmichael | Partner | $875.00/hr
Simone Laroche | Senior Associate | $585.00/hr
Jeffrey Park | Associate | $435.00/hr
Paralegal staff | Paralegal | $275.00/hr

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA EMAIL AND FIRST-CLASS MAIL

CALDERWOOD & HARKNESS LLP

AGREED AND ACCEPTED BY NEXFORD INDUSTRIAL HOLDINGS INC.

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