Dear David,
Thank you for selecting Calderwood & Harkness LLP to serve as borrower's counsel to Nexford Industrial Holdings Inc. in connection with the refinancing and dividend recapitalization described below. We are delighted to be working with you, Michelle, Priya, and the broader Nexford and Granite Peak teams on this important transaction.
I am writing to confirm that our engagement letter was executed earlier today, February 3, 2025, and the matter is now open in our system as **Matter No. 1005-00001**. I will serve as the responsible partner on the engagement, and Ian Blackwood will serve as the billing partner (billing code IBL-NIH-2025-031). Our conflicts check was completed and cleared on January 31, 2025, with no conflicts identified against Nexford Industrial Holdings Inc., Granite Peak Capital Partners, LP, Crescent Harbor Bank, N.A., Atlas Meridian Bank, N.A., or any other known party to the transaction. The executed engagement letter is being delivered to you under separate cover, with a hard copy to follow.
I have set out below a comprehensive overview of the transaction, our scope of work, staffing, key parties, anticipated timeline, and immediate next steps. I hope this serves as a useful reference document as we move forward.
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**I. TRANSACTION SUMMARY AND SCOPE OF ENGAGEMENT**
Calderwood & Harkness will represent Nexford Industrial Holdings Inc., a Delaware corporation headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173 (the "Borrower" or "Nexford"), in connection with the following:
**Facility:** A $1,400,000,000 senior secured Term Loan B facility (the "Term Loan B").
**Arranger / Agent:** Crescent Harbor Bank, N.A., 320 Federal Street, Boston, Massachusetts 02110, serving as lead left arranger, sole bookrunner, administrative agent, and collateral agent.
**Use of Proceeds:** Proceeds of the Term Loan B are expected to be applied as follows:
(i) **Refinancing** — Repayment in full of the existing $875,000,000 first lien term loan facility with Atlas Meridian Bank, N.A. (estimated payoff of approximately $879,375,000, inclusive of accrued and unpaid interest) and termination of the existing $190,000,000 revolving credit facility with Atlas Meridian Bank, N.A. (currently undrawn; to be terminated at closing);
(ii) **Dividend Recapitalization** — A distribution of approximately $335,000,000 to Granite Peak NIH Holdings, LLC, and from there to Granite Peak Capital Fund IV, LP and its co-investors;
(iii) **Transaction Fees and Expenses** — Payment of estimated transaction fees and expenses of approximately $38,625,000; and
(iv) **Balance Sheet Cash** — Delivery of approximately $147,000,000 of cash to Nexford's balance sheet.
**Existing Unsecured Notes:** The existing $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (Pinnacle Trust Company, as trustee) are not being refinanced in this transaction but will be subject to an intercreditor arrangement with Crescent Harbor as first lien collateral agent.
**Sponsor:** Granite Peak Capital Partners, LP is the private equity sponsor. Granite Peak NIH Holdings, LLC is the direct parent of the Borrower and will serve as the Holdings entity under the credit documentation.
**Key Economic Terms** (per the initial term sheet received February 5; note that the Crescent Harbor mandate letter was executed January 27, 2025):
- **Interest Rate:** Term SOFR + 400 basis points, with a 0.75% SOFR floor - **Maturity:** 7 years from closing - **Amortization:** 1.00% per annum ($3,500,000 per quarter) - **OID:** 50 basis points (99.50 issue price) - **Springing Financial Covenant:** Maximum 5.00x first lien net leverage, tested only when revolving borrowings exceed 40% of revolving commitments - **Pro Forma Leverage at Closing:** Approximately 3.38x first lien net leverage; approximately 4.03x total net leverage (based on LTM Adjusted EBITDA of $385,000,000 as of December 31, 2024) - **Governing Law:** New York
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**II. SCOPE OF LEGAL WORK**
Our representation will encompass the following workstreams:
**A. Term Sheet / Commitment Letter Negotiation.** Review and negotiation of the term sheet, commitment letter, and fee letter with Crescent Harbor and its counsel, Whitfield & Gage LLP (Margaret Ashby, lead partner).
**B. Credit Agreement Drafting and Negotiation.** Review of initial drafts prepared by Whitfield & Gage and preparation of borrower mark-ups. Negotiation of all substantive provisions, including definitions, conditions precedent, representations and warranties, affirmative and negative covenants (including the restricted payments, debt incurrence, lien, investment, asset sale, and affiliate transaction baskets), events of default, and lender consent/amendment mechanics.
**C. Security and Collateral Documentation.** Drafting of the guarantee agreement, security agreement (personal property), pledge agreements (at the Holdings, Borrower, and subsidiary levels), intellectual property security agreement, deposit account and securities account control agreements, and intercompany notes. Coordination on perfection matters, including UCC-1 financing statement filings across Delaware, Illinois, Pennsylvania, South Carolina, Texas, and Michigan.
**D. Mortgage and Real Property.** Preparation of mortgages for the four mortgaged properties:
| Property
Coordination with the title insurer, Landmark Title Assurance Company, and mortgage recording in Cook County (IL), Winnebago County (IL), Greenville County (SC), and Harris County (TX). Please note that the mortgages are expected to be post-closing deliverables.
**E. Intercreditor Agreement.** Negotiation of the First Lien/Unsecured Intercreditor Agreement among Pinnacle Trust Company (as unsecured notes trustee), Crescent Harbor (as first lien collateral agent), and the Borrower.
**F. Due Diligence.** Comprehensive legal due diligence on the Borrower and guarantor group, including: corporate and organizational matters; existing credit facilities and the indenture governing the Senior Unsecured Notes; UCC and intellectual property lien searches; real property title; environmental matters (Phase I Environmental Site Assessments prepared by Clearwater Environmental Sciences, Inc.); insurance (coordinating with Vantage Risk Advisors, LLC); material contracts; litigation; and regulatory, sanctions, and OFAC compliance.
**G. Legal Opinions.** Delivery of Calderwood & Harkness's enforceability and UCC perfection opinions under New York law. Coordination with local counsel for state-specific opinions (see Section V below).
**H. Tax Analysis.** Sylvia Hartwell, our specialist partner in the Tax group, will advise on the tax structure and consequences of the dividend recapitalization, interest deductibility under Section 163(j) of the Internal Revenue Code, withholding tax and FATCA considerations for syndicate lenders, and state and local tax implications of the collateral grants and mortgage recordings.
**I. Closing Mechanics.** Preparation of closing certificates, officer's and secretary's certificates, the solvency certificate, funds flow memorandum, and payoff coordination with Atlas Meridian Bank. Preparation of lien release documentation and UCC-3 termination filings for existing Atlas Meridian liens. Overall closing coordination.
**J. Post-Closing.** Tracking and completion of all post-closing obligations, including mortgage recordings and title insurance policy delivery.
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**III. STAFFING**
The Calderwood & Harkness team for this matter is as follows:
- **Claudia Merritt** — Responsible Partner, Banking & Finance. I will provide overall supervision and handle principal-level negotiations with Whitfield & Gage and Crescent Harbor. - **Ian Blackwood** — Billing Partner, Banking & Finance. - **Marcus Leung** — Lead Associate, Banking & Finance. Marcus will serve as the primary day-to-day point of contact and will be responsible for drafting, negotiations, and diligence coordination. He will be reaching out to Priya and the Nexford team shortly regarding due diligence materials. - **Sophie Tremblay** — Working Associate, Banking & Finance. Sophie will handle organizational documents, subsidiary matters, schedules, the closing checklist, and UCC filings. - **Sylvia Hartwell** — Specialist Partner, Tax. Sylvia will lead all tax-related workstreams as described above.
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**IV. GUARANTOR / SUBSIDIARY STRUCTURE**
For your reference, the guarantor group is expected to consist of the following:
**Holdings Guarantor:** Granite Peak NIH Holdings, LLC.
**Subsidiary Guarantors (11):** 1. Nexford Precision Components, Inc. 2. Nexford Engineered Systems, LLC 3. Nexford Coatings & Surface Technologies, Inc. 4. Nexford Manufacturing Services, LLC 5. Nexford Properties, LLC 6. Nexford International Holdings, Inc. (CFC holdco — subject to a limited pledge of 65% of voting equity and 100% of non-voting equity in Nexford Canada Holdings ULC) 7. Clearfield Tool & Die, Inc. 8. Summit Industrial Fabrication Co. 9. Ridgepoint Specialty Coatings, LLC 10. Lakeshore Precision Engineering, Inc.
**Excluded Foreign Subsidiaries:** Nexford Canada Holdings ULC and Nexford Canada Manufacturing, Inc. will not be guarantors.
We will need certified organizational documents, good standing certificates, and board or manager resolutions (as applicable) for each Loan Party. Sophie Tremblay will be reaching out separately regarding those items.
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**V. OTHER COUNSEL AND KEY PARTIES**
The following other counsel and advisors are involved in the transaction:
- **Whitfield & Gage LLP** (Margaret Ashby / Jonathan Ferris) — Counsel to Crescent Harbor Bank, N.A. as arranger and administrative agent. Whitfield & Gage will be preparing the initial draft credit agreement and intercreditor agreement. - **Kellner Brandt & Associates LLP** (Patricia Voss) — Counsel to Granite Peak Capital Partners, LP, the sponsor. We will coordinate with sponsor counsel as needed on Holdings-level matters and the dividend mechanics. - **Hargrove & Whitmore LLP** (Robert Kimura) — Engaged as Illinois local counsel for enforceability and perfection opinions under Illinois law. Their engagement letter is being sent separately. - **Briarcliff Legal Group PA** (Catherine Ellsworth) — Engaged as Delaware local counsel for entity opinions on all Delaware-organized Loan Parties. Their engagement letter is also being sent separately. - **Stonebridge Advisory Group, LLC** (Andrew Castellano) — Financial advisor to Nexford and Granite Peak on the structuring and syndication. - **Ashworth & Kendrick LLP** (Helen Yamamoto) — Nexford's independent auditor. We will need to coordinate with Ashworth & Kendrick regarding comfort letters and/or access to audited financial statements.
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**VI. ANTICIPATED TIMELINE**
We propose the following key milestones. This schedule is aggressive but achievable, and we will keep you apprised of any developments that may affect timing.
| Target Date
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**VII. IMMEDIATE NEXT STEPS AND ACTION ITEMS**
To keep the transaction on track, we propose the following immediate next steps:
1. **Due Diligence Request List.** Calderwood & Harkness will circulate our comprehensive due diligence request list to Nexford (attention: Priya Mehta) tomorrow, February 4, 2025.
2. **Company Point Person.** We would appreciate it if you could formally designate a point person at the company for document collection and coordination. Based on our earlier discussions, Priya Mehta in Treasury would be the natural coordinator, and we are happy to work with her directly.
3. **Data Room Access.** Please let us know whether a virtual data room is in place or whether we should make alternative arrangements for document delivery.
4. **Board Resolutions.** We understand that the board resolutions authorizing the transaction were adopted on January 13, 2025. We will need certified copies at your earliest convenience.
5. **Organizational Documents.** Sophie Tremblay will be reaching out to your team regarding organizational documents and corporate records for each Loan Party.
6. **Kickoff Call.** I would like to propose a kickoff call with the Calderwood & Harkness team and Nexford's internal team — including you, Michelle, and Priya — to discuss priorities, open issues, and any known concerns. Marcus will follow up to schedule a convenient time later this week.
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**VIII. CLOSING**
We are genuinely enthusiastic about working with Nexford and the Granite Peak team on this significant transaction and are committed to delivering a first-rate result on the timeline outlined above.
A separate internal budget estimate is being prepared for your review, and we will of course adhere to Nexford's outside counsel guidelines. An acknowledgment letter confirming our compliance with those guidelines will follow shortly.
Please do not hesitate to reach out at any time if you have questions or would like to discuss any aspect of the engagement. I am available by phone or email at your convenience.
We look forward to getting underway.
With best regards,
**Claudia Merritt** Partner, Banking & Finance Calderwood & Harkness LLP 425 Lexington Avenue New York, New York 10017 T: (212) 506-7400 E: cmerritt@calderwoodharkness.com
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