SETTLEMENT AGREEMENT AND MUTUAL RELEASE
**Execution Date: **
This Agreement resolves all disputes between the Parties in connection with Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, Circuit Court of Cook County, Illinois, County Department, Law Division
This Settlement Agreement and Mutual Release (this "Agreement") is entered into as of (the "Effective Date"), by and between:
Nexford Industrial Holdings Inc., a Delaware corporation with its principal place of business at 4200 West Lakeshore Industrial Parkway, Suite 300, Waukegan, Illinois 60085 (hereinafter "Nexford" or "NIH");
and
Cardinal Peak Industries, a Colorado limited liability company with its principal place of business at 1580 Ridgeline Boulevard, Pueblo, Colorado 81001 (hereinafter "Cardinal Peak" or "CPI").
Nexford and Cardinal Peak are each referred to individually herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Nexford and Cardinal Peak are parties to that certain Master Supply Agreement dated January 15, 2020, (the "MSA"), pursuant to which Cardinal Peak manufactures and supplies hot-rolled coil ("HRC") and cold-rolled coil ("CRC") steel products to Nexford for use in Nexford's downstream fabrication and distribution operations;
WHEREAS, the MSA provides for the pass-through of certain raw-material surcharges, including scrap surcharges, energy surcharges, and alloy surcharges, subject to ;
WHEREAS, a dispute arose between the Parties concerning surcharge invoices issued by Cardinal Peak for the period from March 2021 through May 2022 (the "Disputed Period"), during which Cardinal Peak invoiced total surcharges of approximately Six Million Four Hundred Ten Thousand Dollars ($6,410,000.00), (the "Surcharge Dispute");
WHEREAS, at the core of the Surcharge Dispute, Nexford contends that Cardinal Peak deviated from the Surcharge Methodology by, among other things, utilizing incorrect index reference dates, applying surcharges to product categories excluded from the surcharge pass-through framework, and failing to apply the cap-and-collar limitations set forth in Exhibit C, while Cardinal Peak contends that its surcharge calculations were proper and in accordance with the MSA as reasonably interpreted;
WHEREAS, on June 10, 2022, Cardinal Peak, through its counsel Blackwood Stein & Associates LLP, issued a formal demand to Nexford for payment of Four Million Seven Hundred Thirty Thousand Dollars ($4,730,000.00), which demand included a detailed reconciliation of surcharge invoices for the Disputed Period, and Nexford, through its , rejected such demand by letter dated July 5, 2022, setting forth Nexford's position that a substantial portion of the surcharges had been improperly calculated;
WHEREAS, on August 8, 2022, Cardinal Peak filed a Complaint against Nexford in the Circuit Court of Cook County, Illinois, County Department, Law Division, docketed as Case No. 2022-L-008471 (the "Litigation"), asserting claims for breach of contract (Count I), unjust enrichment (Count II), and account stated (Count III), and seeking damages in the amount of $4,730,000.00, plus pre-judgment interest, costs, and attorneys' fees;
WHEREAS, on August 2, 2023, the Parties participated in a full-day mediation session before the Honorable Catherine Lindström (Ret.) at the Great Lakes Dispute Resolution Center, 150 North Riverside Plaza, Suite 2700, Chicago, Illinois 60606, at which session the Parties, after extensive arms-length negotiation, reached an agreement in principle to resolve the Surcharge Dispute, the material terms of which were memorialized in a ;
WHEREAS, the Parties desire to fully and finally resolve and settle the Litigation, including all claims asserted in the Complaint and the Counterclaim, and all other disputes, claims, and controversies between them arising out of or relating to the MSA, the Surcharge Dispute, and the Disputed Period, without any admission of liability, or fault by either , on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties hereby agree as follows:
ARTICLE 1 — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings ascribed to them below. Capitalized terms used but not defined in this Article 1 shall have the meanings given to them elsewhere in this Agreement.
1.1 "Agreement" means this Settlement Agreement and Mutual Release, including all exhibits and schedules attached hereto, as the same may be amended or supplemented from time to time in accordance with Section 9.4 hereof.
1.2 "Cardinal Peak Released Parties" means Cardinal Peak Industries, together with its .
** "Disputed Period"** means the period commencing March 1, 2021 and ending May 31, 2022, inclusive.
** "Effective Date"** means August 18, 2023, the date of execution of this Agreement by both Parties.
** "Litigation"* means the lawsuit styled 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, including all claims, counterclaims, cross-claims, third-party claims, motions, and proceedings filed or initiated therein.
** "MSA"** means the Master Supply Agreement dated January 15, 2020, entered into between Nexford and Cardinal Peak, together with all exhibits, schedules, amendments, and addenda thereto.
** "Nexford Released Parties"** means Nexford Industrial Holdings Inc., together with its .
** "Settlement Amount"** means the aggregate sum of One Million Eight Hundred Ninety Thousand Dollars ($1,890,000.00), as further described in Article 2 hereof.
ARTICLE 2 — SETTLEMENT PAYMENT
2.1 Settlement Amount. In full and final settlement of all claims, counterclaims, demands, and causes of action asserted or that could have been asserted in the Litigation or otherwise arising out of or relating to the Surcharge Dispute, the MSA (including Section 7.4, Exhibit C, and the Surcharge Methodology), and the Disputed Period, Nexford shall pay to Cardinal Peak the aggregate sum of One Million Eight Hundred Ninety Thousand Dollars ($1,890,000.00) (the "Settlement Amount"). Payment of the Settlement Amount, in accordance with the terms set forth herein, shall constitute full satisfaction of all obligations of Nexford to Cardinal Peak arising out of or relating to the Surcharge Dispute and the Litigation.
2.2 Payment Schedule. The Settlement Amount shall be paid by Nexford to Cardinal Peak
2.3 Payment Method. All payments under this Article 2 shall be made by wire transfer of immediately available funds in United States Dollars to a bank account designated by Cardinal Peak in writing. Nexford shall not be deemed in default of any payment obligation under this Agreement if Cardinal Peak fails to timely provide such wire transfer instructions, in which case the applicable payment deadline shall be extended by one (1) business day for each business day of delay in providing such instructions.
ARTICLE 3 — MUTUAL RELEASES
3.1 Release by Cardinal Peak. Effective upon , Cardinal Peak, on behalf of itself and each of the Cardinal Peak Released Parties, hereby irrevocably and unconditionally releases, acquits, and forever discharges each of the Nexford Released Parties from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, losses, costs, expenses (including but not limited to attorneys' fees and expert witness fees), liabilities, and obligations of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, at law, in equity, or otherwise, that Cardinal Peak or any Cardinal Peak Released Party ever had, now has, or may hereafter claim to have against any Nexford Released Party, arising out of or in any way relating to :
3.2 Release by Nexford. Effective upon execution of this Agreement by both Parties, Nexford, on behalf of itself and each of the Nexford Released Parties, hereby irrevocably and unconditionally releases, acquits, and forever discharges each of the Cardinal Peak Released Parties from any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, losses, costs, expenses (including but not limited to attorneys' fees and expert witness fees), liabilities, and obligations of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, fixed or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, at law, in equity, or otherwise, that Nexford or any Nexford Released Party ever had, now has, or may hereafter claim to have against any Cardinal Peak Released Party, arising out of or in any way relating to:
(a) the MSA, including without limitation Section 7.4 thereof, Exhibit C thereto, and the Surcharge Methodology, as well as all purchase orders, invoices, delivery schedules, change orders, and other documents issued or exchanged pursuant to or in connection with the MSA during the Disputed Period;
(b) the Surcharge Dispute, including without limitation all surcharge invoices, surcharge calculations, surcharge reconciliations, and surcharge-related communications between the Parties during the Disputed Period;
(c) the ; and
(d) any and all other matters, facts, events, transactions, acts, omissions, or circumstances that were or could have been asserted by Nexford or any Nexford Released Party in the Litigation or the Counterclaim, whether or not actually pled, whether arising under statute, common law, contract, tort, or any other theory of recovery.
** No Admission of Liability.** This Agreement, and the settlement reflected herein, not constitute and shall not be construed as an admission of liability, wrongdoing, or responsibility by either Party .
ARTICLE 4 — DISMISSAL OF LITIGATION
4.1 Stipulation of Dismissal. Within five (5) business days following the Effective Date, counsel for the Parties shall jointly prepare, execute, and file with the Circuit Court of Cook County, Illinois, a Stipulation of Dismissal with Prejudice of all claims and counterclaims pending in the Litigation, Case No. 2022-L-008471, in a form substantially consistent with the requirements of the Illinois Code of Civil Procedure and the local rules of the Circuit Court of Cook County.
4.2 Cooperation. Each Party shall cooperate fully with the other Party, and shall execute and deliver such further documents and instruments as may be reasonably necessary or appropriate, to effectuate the dismissal of the Litigation in accordance with Section 4.1, including without limitation any agreed orders, stipulations, or other filings required by the Court.
ARTICLE 5 — TERMINATION OF THE MSA
5.1 MSA Termination. The MSA (MSA-NIH-CPI-2020-001, dated January 15, 2020) shall terminate by mutual agreement of the Parties effective as of August 31, 2023 (the "MSA Termination Date").
ARTICLE 6 — CONFIDENTIALITY
6.1 Confidential Treatment.
ARTICLE 7 — REPRESENTATIONS AND WARRANTIES
7.1 Representations of Nexford. Nexford hereby represents and warrants to Cardinal Peak, as of the Effective Date, as follows:
(a) Organization and Good Standing. Nexford is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.
(b) Authorization. The execution, delivery, and performance of this Agreement by Nexford have been duly authorized by all necessary corporate action, including any required approvals of Nexford's board of directors, and no further corporate proceedings on the part of Nexford are necessary to authorize this Agreement or the transactions contemplated hereby.
(c) Enforceability. This Agreement constitutes a valid and binding obligation of Nexford, enforceable against Nexford in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(d) Financial Capacity.
(e) No Assignment of Claims. Nexford has not assigned, transferred, conveyed, pledged, or otherwise encumbered any of the claims released by Nexford herein to any third party, and no third party has any interest, legal or equitable, in any such claims.
7.2 Representations of Cardinal Peak. Cardinal Peak hereby represents and warrants to Nexford, as of the Effective Date, as follows:
(a) Organization and Good Standing. Cardinal Peak is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Colorado and has all requisite limited liability company power and authority to own, lease, and operate its properties and to carry on its business as presently conducted.
(b) Authorization. The execution, delivery, and performance of this Agreement by Cardinal Peak have been duly authorized by all necessary action of its members and managers, including any required approvals under Cardinal Peak's operating agreement, and no further proceedings on the part of Cardinal Peak are necessary to authorize this Agreement or the transactions contemplated hereby.
(c) Enforceability. This Agreement constitutes a valid and binding obligation of Cardinal Peak, enforceable against Cardinal Peak in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
ARTICLE 8 — INDEMNIFICATION
8.1 Mutual Indemnification.
ARTICLE 9 — MISCELLANEOUS PROVISIONS
9.1 Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of Illinois, without giving effect to any choice-of-law or conflict-of-laws rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.
9.2 Jurisdiction and Venue. The Parties agree that any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, shall be brought exclusively in the . Each Party hereby irrevocably and unconditionally (a) consents and submits to the exclusive personal jurisdiction and venue of such courts for any such action or proceeding, (b) waives any objection that it may now or hereafter have to the laying of venue of any such action or proceeding in such courts, and (c) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over the Parties.
9.3 Entire Agreement. This Agreement, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, discussions, representations, and commitments, whether oral or written, between the Parties relating to the subject matter hereof, . No Party has relied upon any statement, representation, warranty, or agreement of any other Party except for those expressly set forth in this Agreement.
9.4 Amendments. This Agreement may not be amended, modified, restated, or supplemented in any respect except by a written instrument duly executed by authorized representatives of both Parties. No oral modification or amendment of this Agreement shall be of any force or effect.
9.5 Waiver. The failure of either Party to enforce any provision of this Agreement at any time or for any period of time shall not constitute a waiver of that Party's right to enforce that provision or any other provision of this Agreement at any future time. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party. No waiver of any breach of this Agreement shall be construed as a waiver of any subsequent or different breach.
9.6 Severability. If any provision of this Agreement (or any portion thereof) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable under applicable law, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision of this Agreement, and the remaining provisions shall continue in full force and effect. In such event, the Parties shall negotiate in good faith to replace the invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that most closely approximates the intent and economic effect of the original provision.
9.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators, and legal representatives. Neither Party may assign, delegate, or transfer any of its rights or obligations under this Agreement to any third party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. Any purported assignment in violation of this Section 9.7 shall be null and void.
9.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.
9.9 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given and received (i) upon personal delivery, (ii) one (1) business day after deposit with a nationally recognized overnight courier service (with confirmation of delivery), or (iii) three (3) business days after deposit in the United States mail, certified or registered, return receipt requested, postage prepaid, in each case addressed as follows:
If to Cardinal Peak:
Cardinal Peak Industries 1580 Ridgeline Boulevard Pueblo, Colorado 81001
Attention: Patricia Morrow, General Counsel
Telephone: (719) 555-3100
With a copy (which shall not constitute notice) to:
Blackwood Stein & Associates LLP 717 Seventeenth Street, Suite 2200 Denver, Colorado 80202
Attention: Garrett Blackwood, Partner
Telephone: (303) 555-6200
Either Party may change its address for purposes of this Section 9.9 by giving the other Party written notice of such change in accordance with the provisions of this Section.
** Headings.** The article and section headings contained in this Agreement are inserted for convenience of reference only and shall not affect in any way the meaning, interpretation, or construction of any provision of this Agreement.
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE TO SETTLEMENT AGREEMENT AND MUTUAL RELEASE
IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement and Mutual Release as of the date first written above.
NEXFORD INDUSTRIAL HOLDINGS INC.
By: ________
Name: Martin Schaeffer
Title:
Date: August 18, 2023
CARDINAL PEAK INDUSTRIES
By: ________
Name: Frank Delacroix
Title: President & Chief Executive Officer
Date: August 18, 2023
CONFIDENTIAL — This Settlement Agreement and Mutual Release is subject to the confidentiality provisions set forth in Article 6 hereof and shall not be disclosed except as expressly permitted therein.