CALDERWOOD & HARKNESS LLP 425 Lexington Avenue New York, New York 10017
Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
March 28, 2025
Crescent Harbor Bank, N.A. in its capacity as Collateral Agent under the Credit Agreement (as defined below) 320 Federal Street Boston, Massachusetts 02110
Attention: Elaine Prescott, Managing Director, Leveraged Finance Origination
Re: Opinion Regarding Perfection of Security Interests under the New York Uniform Commercial Code — $1,400,000,000 Senior Secured Term Loan B Facility
Ladies and Gentlemen:
We have acted as counsel to Nexford Industrial Holdings Inc., a Delaware corporation (the "Borrower"), and the Guarantors (as defined below) in connection with the Credit Agreement dated as of March 28, 2025 (the "Credit Agreement"), among Nexford Industrial Holdings Inc., as Borrower, the Guarantors party thereto, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent (the "Collateral Agent"), Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, and the Lenders party thereto, providing for, among other things, a $1,400,000,000 senior secured term loan B facility (the "Term Loan B Facility").
This opinion letter is being delivered to you pursuant to Section 4.01(e)(iii) of the Credit Agreement as a condition precedent to the initial borrowing under the Term Loan B Facility on the date hereof. This opinion addresses the attachment, perfection, and, to the limited extent set forth in Section 4.8 below, the priority of the security interests in personal property Collateral (as defined below) granted under the Security Documents (as defined below) in favor of the Collateral Agent for the benefit of the Secured Parties (as defined below), in each case under the New York Uniform Commercial Code (the "NY UCC").
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Credit Agreement or the Security Agreement (as defined below), as applicable.
1. Defined Terms
1.1 Transaction Documents Referenced
For purposes of this opinion, the following terms have the meanings set forth below:
"Credit Agreement" means the Credit Agreement dated as of March 28, 2025, among Nexford Industrial Holdings Inc., as Borrower, the Guarantors party thereto, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent, Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, and the Lenders party thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Security Agreement" means the Security Agreement dated as of March 28, 2025, among the Borrower, each of the Guarantors party thereto, and Crescent Harbor Bank, N.A., as Collateral Agent for the benefit of the Secured Parties, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Holdings Pledge Agreement" means the Pledge Agreement dated as of March 28, 2025, by Granite Peak NIH Holdings, LLC, a Delaware limited liability company ("Holdings"), in favor of Crescent Harbor Bank, N.A., as Collateral Agent, pursuant to which Holdings has pledged 100% of the issued and outstanding equity interests in the Borrower to the Collateral Agent for the benefit of the Secured Parties.
"Borrower Pledge Agreement" means the Pledge Agreement dated as of March 28, 2025, by the Borrower in favor of Crescent Harbor Bank, N.A., as Collateral Agent, pursuant to which the Borrower has pledged 100% of the issued and outstanding equity interests in each direct domestic subsidiary of the Borrower to the Collateral Agent for the benefit of the Secured Parties.
"Subsidiary Pledge Agreements" means, collectively, the Pledge Agreements dated as of March 28, 2025, by each Subsidiary Guarantor in favor of Crescent Harbor Bank, N.A., as Collateral Agent, pursuant to which each such Subsidiary Guarantor has pledged equity interests in its respective subsidiaries to the Collateral Agent for the benefit of the Secured Parties. The entities whose equity interests are the subject of the Subsidiary Pledge Agreements include:
(i) Nexford Precision Components, Inc.;
(ii) Nexford Engineered Systems, LLC;
(iii) Nexford Coatings & Surface Technologies, Inc.;
(iv) Nexford Manufacturing Services, LLC;
(v) Nexford Properties, LLC;
(vi) Nexford International Holdings, Inc.;
(vii) Clearfield Tool & Die, Inc.;
(viii) Summit Industrial Fabrication Co.;
(ix) Ridgepoint Specialty Coatings, LLC; and
(x) Lakeshore Precision Engineering, Inc.
"CFC Holdco Limited Pledge Agreement" means the Limited Pledge Agreement dated as of March 28, 2025, by Nexford International Holdings, Inc. in favor of Crescent Harbor Bank, N.A., as Collateral Agent, pursuant to which Nexford International Holdings, Inc. has pledged (a) 65% of the issued and outstanding voting equity interests and (b) 100% of the issued and outstanding non-voting equity interests in Nexford Canada Holdings ULC, an unlimited liability company organized under the laws of the Province of British Columbia, Canada, to the Collateral Agent for the benefit of the Secured Parties.
"intellectual Property Security Agreement" means the intellectual Property Security Agreement dated as of March 28, 2025, among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, N.A., as Collateral Agent, granting a security interest in the patents, patent applications, trademarks, trademark applications, registered copyrights, copyright applications, and related intellectual property rights of the Grantors identified therein, in each case for the benefit of the Secured Parties.
"Intercompany Note" means the Intercompany Promissory Note dated as of March 28, 2025, in the aggregate principal amount of $47,500,000, issued by Nexford Precision Components, Inc. in favor of the Borrower, which Intercompany Note has been endorsed and pledged to the Collateral Agent pursuant to the Security Agreement.
"Deposit Account Control Agreements" means, collectively, the Deposit Account Control Agreements dated as of March 28, 2025, among the applicable Grantors, the applicable depository banks, and Crescent Harbor Bank, N.A., as Collateral Agent, covering deposit accounts maintained at (a) Crescent Harbor Bank, N.A. (account numbers ending in -4471 and -4472) and (b) Redstone National Bank (account number ending in -6633).
"Securities Account Control Agreements" means, collectively, the Securities Account Control Agreements dated as of March 28, 2025, among the applicable Grantors, the applicable securities intermediaries, and Crescent Harbor Bank, N.A., as Collateral Agent, covering securities accounts and investment property held therein.
The Security Agreement, the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, the CFC Holdco Limited Pledge Agreement, the intellectual Property Security Agreement, the Deposit Account Control Agreements, the Securities Account Control Agreements, and the Intercompany Note (to the extent pledged) are collectively referred to herein as the "Security Documents."
1.2 Defined Parties
"Borrower" means Nexford Industrial Holdings Inc., a Delaware corporation (EIN: 36-4178552; Delaware Secretary of State File No. 5765432).
"Holdings Guarantor" means Granite Peak NIH Holdings, LLC, a Delaware limited liability company (EIN: 85-3291047; Delaware Secretary of State File No. 7234891).
"Subsidiary Guarantors" means each of the following entities:
(i) Nexford Precision Components, Inc., a Delaware corporation;
(ii) Nexford Engineered Systems, LLC, a Delaware limited liability company;
(iii) Nexford Coatings & Surface Technologies, Inc., a Delaware corporation;
(iv) Nexford Manufacturing Services, LLC, an Illinois limited liability company;
(v) Nexford Properties, LLC, a Delaware limited liability company;
(vi) Nexford International Holdings, Inc., a Delaware corporation;
(vii) Clearfield Tool & Die, Inc., a Pennsylvania corporation;
(viii) Summit Industrial Fabrication Co., a South Carolina corporation;
(ix) Ridgepoint Specialty Coatings, LLC, a Texas limited liability company; and
(x) Lakeshore Precision Engineering, Inc., a Michigan corporation.
The Holdings Guarantor and the Subsidiary Guarantors are collectively referred to herein as the "Guarantors." The Borrower and the Guarantors are collectively referred to herein as the "Grantors."
"Collateral Agent" or "Secured Party" means Crescent Harbor Bank, N.A., in its capacity as Collateral Agent for the benefit of the Secured Parties under and as defined in the Credit Agreement.
"Secured Parties" means, collectively, the Collateral Agent, the Administrative Agent (Crescent Harbor Bank, N.A., in its capacity as Administrative Agent under the Credit Agreement), and the Lenders from time to time party to the Credit Agreement.
1.3 UCC Defined Terms
"UCC" or "NY UCC" means the Uniform Commercial Code as in effect in the State of New York on the date hereof. Unless otherwise indicated, all references to articles and sections of the UCC are references to articles and sections of the NY UCC. References to "Article 8" and "Article 9" are to Articles 8 and 9, respectively, of the NY UCC.
"Filing Office" means, with respect to each Grantor that is a registered organization (as defined in UCC §9-102(a)(71)), the office of the Secretary of State (or equivalent filing authority) in the state of organization of such Grantor, specifically:
(a) the Delaware Secretary of State (for all Grantors organized in Delaware);
(b) the Illinois Secretary of State (for Nexford Manufacturing Services, LLC);
(c) the Pennsylvania Department of State (for Clearfield Tool & Die, Inc.);
(d) the South Carolina Secretary of State (for Summit Industrial Fabrication Co.);
(e) the Texas Secretary of State (for Ridgepoint Specialty Coatings, LLC); and
(f) the Michigan Department of State (for Lakeshore Precision Engineering, Inc.).
1.4 Other Defined Terms
"Collateral" means the collateral described in the Security Documents and consists of first-priority security interests (subject to Permitted Liens as defined in the Credit Agreement) in substantially all assets of the Grantors, including, without limitation, accounts receivable (accounts), inventory, equipment, intellectual property, deposit accounts, securities accounts and investment property, general intangibles (including payment intangibles and software), chattel paper, instruments, intercompany notes, commercial tort claims (as scheduled), equity interests in subsidiaries, and all identifiable proceeds of the foregoing.
"Pledged Equity" means (a) 100% of the issued and outstanding equity interests in each direct domestic subsidiary of the Borrower and Holdings, and (b) 65% of the issued and outstanding voting equity interests and 100% of the issued and outstanding non-voting equity interests in Nexford Canada Holdings ULC, the first-tier foreign subsidiary of the Borrower, in each case as more particularly described in the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, and the CFC Holdco Limited Pledge Agreement.
"UCC-1 Financing Statements" means the UCC-1 financing statements described in Section 3 below, filed or authorized for filing in the applicable Filing Offices.
"Opinion Back-Up Certificate" means the Opinion Back-Up Certificate of the Borrower dated March 28, 2025, executed by Jonathan R. Henning, Executive Vice President and General Counsel of the Borrower, delivered to this firm concurrently herewith, certifying as to certain factual matters relevant to this opinion.
2. Documents Examined and Reliance
2.1 Documents Reviewed
In connection with rendering the opinions expressed herein, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the following documents:
(a) the Credit Agreement;
(b) the Guarantee Agreement dated as of March 28, 2025, among the Guarantors and Crescent Harbor Bank, N.A., as Administrative Agent;
(c) each of the Security Documents (as defined in Section 1.1 above), including the Security Agreement, the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, the CFC Holdco Limited Pledge Agreement, the intellectual Property Security Agreement, the Deposit Account Control Agreements, and the Securities Account Control Agreements;
(d) the Intercompany Note, duly endorsed in blank or to the order of the Collateral Agent, together with evidence of delivery thereof to the Collateral Agent;
(e) the UCC-1 Financing Statements described in Section 3 below, each in the form authorized for filing in the respective Filing Office on March 28, 2025;
(f) the Deposit Account Control Agreements and Securities Account Control Agreements described in Section 1.1 above;
(g) the Opinion Back-Up Certificate of the Borrower dated March 28, 2025;
(h) certified copies of the certificate of incorporation or certificate of formation (or equivalent organizational document) of each Grantor, as filed with the applicable Secretary of State or Department of State, together with all amendments thereto;
(i) certificates of good standing (or certificates of status, as applicable) for each Grantor issued by the Secretary of State or Department of State of its respective jurisdiction of organization, each dated within five (5) business days of the date hereof;
(j) a certificate of the Secretary or an authorized person of each Grantor, dated March 28, 2025, certifying as to (1) the incumbency and signatures of officers or authorized persons executing the Security Documents on behalf of such Grantor, (2) the bylaws or operating agreement of such Grantor, and (3) resolutions or written consents authorizing the execution, delivery, and performance of the Security Documents and the transactions contemplated thereby;
(k) UCC search reports (including federal and state tax lien searches) from each applicable Filing Office with respect to each Grantor, obtained from Pemberton Industries and dated no earlier than March 21, 2025; and
(l) such other certificates, documents, instruments, and records as we have deemed necessary or appropriate for purposes of this opinion.
2.2 Assumptions of Fact
In rendering the opinions expressed herein, we have, with your permission and without independent investigation or verification, relied upon and assumed the accuracy and completeness of the following:
(a) The factual representations, certifications, and statements of fact set forth in the Opinion Back-Up Certificate and in the certificates and closing documents delivered to us on or prior to the date hereof are true, correct, and complete in all material respects as of the date hereof.
(b) Each Grantor has rights in the Collateral described in the Security Documents, or will acquire rights therein contemporaneously with the attachment of the security interests created under the Security Documents, and value has been given by the Secured Parties to each Grantor in connection with the Credit Agreement and the Security Documents. We have not independently verified the existence, nature, or extent of any Grantor's rights in or title to any specific item of Collateral.
(c) All representations and warranties of each Grantor contained in the Credit Agreement, the Security Documents, and the closing certificates delivered in connection therewith are true and correct in all material respects as of the date hereof.
(d) All signatures on all documents examined by us are genuine; all documents submitted to us as originals are authentic; all documents submitted to us as copies conform to the originals thereof; and all public records reviewed by us or on our behalf are accurate and complete.
(e) Each Grantor is a validly organized and existing entity in good standing under the laws of its respective jurisdiction of organization and has the requisite power and authority to execute, deliver, and perform its obligations under the Security Documents to which it is a party. With respect to the Delaware-organized Grantors, we have relied upon the opinion of Briarcliff Legal Group PA (Catherine Ellsworth, lead partner) delivered concurrently herewith, addressing matters of Delaware entity law.
(f) Each of the Security Documents constitutes the legal, valid, and binding obligation of each Grantor party thereto, enforceable against such Grantor in accordance with its terms, subject to customary enforceability exceptions. This opinion does not address the enforceability of the Security Documents, and we express no opinion thereon except to the extent necessary to opine on the creation and attachment of the security interests described herein.
(g) None of the Grantors has changed its legal name, jurisdiction of organization, or organizational identification number since the date of formation or, if any such change has occurred, such change has been reflected in the UCC-1 Financing Statements described herein or appropriate amendments thereto.
(h) Each Grantor's exact legal name as set forth in the UCC-1 Financing Statements described in Section 3 is the correct legal name of such Grantor as shown on its organizational documents filed with its jurisdiction of organization, and such name is sufficient to make such financing statements seriously misleading or sufficient to be retrieved by a search under such name in the applicable Filing Office's standard search logic, within the meaning of UCC §9-506.
3. UCC-1 Financing Statements
The following UCC-1 Financing Statements have been duly authorized and executed by the applicable Grantors and have been filed, or have been submitted for filing, in the respective Filing Offices on March 28, 2025, in each case naming Crescent Harbor Bank, N.A. as Secured Party:
Each of the UCC-1 Financing Statements listed above describes the Collateral in terms that are consistent with the collateral description set forth in the Security Agreement and covers all personal property assets of the applicable Grantor in which a security interest has been granted thereunder, using an "all assets" or substantially equivalent collateral description as permitted by UCC §9-504.
The Filing Office for each Grantor has been determined based on such Grantor's status as a "registered organization" within the meaning of UCC §9-102(a)(71) and, accordingly, pursuant to UCC §9-307(e), such Grantor is deemed located in its state of organization for purposes of determining the appropriate jurisdiction in which to file a financing statement to perfect a security interest by filing under UCC §9-301(1).
4. Opinions
Based upon and subject to the foregoing, and subject to the qualifications, assumptions, exceptions, and limitations set forth in Section 5 below, we are of the opinion that:
4.1 Attachment of Security Interests
Assuming that each Grantor has rights in the Collateral described in the applicable Security Documents (or acquires such rights contemporaneously with the attachment of the security interests), that value has been given, and that each Grantor has authenticated a security agreement that provides a description of the Collateral, the Security Documents are effective to create valid security interests in favor of the Collateral Agent, for the benefit of the Secured Parties, in the personal property Collateral described therein, to the extent that security interests therein can be created under Article 9 of the NY UCC. The security interests so created attach to the Collateral in which each Grantor has rights upon the satisfaction of the requirements of UCC §9-203(b).
4.2 Perfection by Filing
Upon the filing of the UCC-1 Financing Statements described in Section 3 above in the respective Filing Offices identified therein, the security interests in the following categories of Collateral will be perfected to the extent that perfection can be achieved by the filing of a financing statement under Article 9 of the NY UCC:
(a) accounts (as defined in UCC §9-102(a)(2)), including accounts receivable;
(b) inventory (as defined in UCC §9-102(a)(48));
(c) equipment (as defined in UCC §9-102(a)(33));
(d) general intangibles (as defined in UCC §9-102(a)(42)), including payment intangibles (as defined in UCC §9-102(a)(61)) and software (as defined in UCC §9-102(a)(76));
(e) goods (as defined in UCC §9-102(a)(44)), to the extent not otherwise covered by the categories set forth in clauses (b) and (c) above;
(f) chattel paper (as defined in UCC §9-102(a)(11)), to the extent perfectable by filing under Article 9 of the NY UCC;
(g) commercial tort claims (as defined in UCC §9-102(a)(13)), to the extent such claims are described with sufficient specificity in the Security Agreement schedules as required by UCC §9-108(e);
(h) instruments (as defined in UCC §9-102(a)(47)), to the extent perfectable by filing under Article 9 of the NY UCC (subject to the superior perfection by possession described in Section 4.6 below);
(i) supporting obligations (as defined in UCC §9-102(a)(78)); and
(j) identifiable proceeds (as defined in UCC §9-102(a)(64)) of all of the foregoing, to the extent and for so long as perfection of a security interest in such proceeds is maintained under UCC §9-315(c) and (d).
The financing statements identified in Section 3 are filed in the state of organization of each applicable Grantor, which, for each Grantor that is a registered organization, constitutes the correct Filing Office for perfection by filing of a financing statement under UCC §§9-301(1) and 9-307(e). Each financing statement sufficiently provides the name of the debtor, the name and mailing address of the secured party, and an indication of the collateral covered within the requirements of UCC §9-502(a).
4.3 Perfection by Control — Deposit Accounts
Upon execution and delivery of the Deposit Account Control Agreements among the applicable Grantors, the applicable depository banks (Crescent Harbor Bank, N.A. and Redstone National Bank), and Crescent Harbor Bank, N.A., as Collateral Agent, the security interests in the deposit accounts identified therein — specifically, deposit accounts ending in -4471 and -4472 maintained at Crescent Harbor Bank, N.A. and deposit account ending in -6633 maintained at Redstone National Bank — are perfected by "control" within the meaning of UCC §9-104.
Under UCC §9-312(b)(1), a security interest in a deposit account may be perfected only by control; filing a financing statement is not effective to perfect a security interest in a deposit account. The Deposit Account Control Agreements establish "control" by providing that the applicable depository bank has agreed to comply with instructions originated by the Collateral Agent directing disposition of the funds in such deposit accounts without further consent by the applicable Grantor, within the meaning of UCC §9-104(a)(2). In addition, with respect to the deposit accounts maintained at Crescent Harbor Bank, N.A., the Collateral Agent has control by virtue of being the bank at which such accounts are maintained, within the meaning of UCC §9-104(a)(1).
4.4 Perfection by Control — Securities Accounts and Investment Property
Upon execution and delivery of the Securities Account Control Agreements among the applicable Grantors, the applicable securities intermediaries, and Crescent Harbor Bank, N.A., as Collateral Agent, the security interests in the securities accounts maintained at such securities intermediaries and the financial assets and investment property credited thereto are perfected by "control" within the meaning of UCC §§8-106 and 9-106.
The Securities Account Control Agreements provide that the applicable securities intermediary will comply with entitlement orders originated by the Collateral Agent with respect to the securities accounts without further consent by the applicable Grantor, thereby establishing "control" over such securities accounts within the meaning of UCC §8-106(d)(2). Perfection by control of a security interest in investment property held in a securities account is governed by UCC §9-314(a), and such method of perfection is effective with respect to all financial assets credited to such securities accounts from time to time, including securities, security entitlements, and other investment property.
4.5 Perfection by Delivery — Certificated Securities (Pledged Equity)
To the extent that the Pledged Equity consists of "certificated securities" within the meaning of UCC §8-102(a)(4), and to the extent that the certificates representing such certificated securities have been delivered to the Collateral Agent in the State of New York, together with undated stock powers or membership interest transfer instruments duly endorsed in blank, the security interests in such certificated securities are perfected by delivery and/or control within the meaning of UCC §§8-301(a), 9-313(a), and 9-106(a).
This opinion applies specifically to the following equity pledges:
(a) the Holdings Pledge Agreement, pursuant to which Granite Peak NIH Holdings, LLC has pledged 100% of the issued and outstanding equity interests in the Borrower;
(b) the Borrower Pledge Agreement, pursuant to which the Borrower has pledged 100% of the issued and outstanding equity interests in each of its direct domestic subsidiaries (Nexford Precision Components, Inc.; Nexford Engineered Systems, LLC; Nexford Coatings & Surface Technologies, Inc.; Nexford Manufacturing Services, LLC; Nexford Properties, LLC; Nexford International Holdings, Inc.; Clearfield Tool & Die, Inc.; Summit Industrial Fabrication Co.; Ridgepoint Specialty Coatings, LLC; and Lakeshore Precision Engineering, Inc.); and
(c) the CFC Holdco Limited Pledge Agreement, pursuant to which Nexford International Holdings, Inc. has pledged 65% of the issued and outstanding voting equity interests and 100% of the issued and outstanding non-voting equity interests in Nexford Canada Holdings ULC.
We note the following with respect to the Pledged Equity:
(i) For equity interests in entities organized as corporations (i.e., Nexford Precision Components, Inc.; Nexford Coatings & Surface Technologies, Inc.; Nexford International Holdings, Inc.; Clearfield Tool & Die, Inc.; Summit Industrial Fabrication Co.; Lakeshore Precision Engineering, Inc.; and the Borrower itself), we have assumed that such interests constitute "certificated securities" under Article 8 of the NY UCC, and that the certificates representing such interests have been delivered to the Collateral Agent together with duly executed stock powers endorsed in blank. Perfection is achieved by delivery under UCC §8-301(a) and UCC §9-313(a).
(ii) For equity interests in entities organized as limited liability companies (i.e., Nexford Engineered Systems, LLC; Nexford Manufacturing Services, LLC; Nexford Properties, LLC; and Ridgepoint Specialty Coatings, LLC), the characterization of such interests depends upon whether the applicable limited liability company operating agreement has "opted in" to Article 8 treatment by providing that such interests are "securities" governed by Article 8 of the NY UCC. Based upon our review of the applicable operating agreements and the certifications in the Opinion Back-Up Certificate:
(A) To the extent any such LLC interest has been opted into Article 8 treatment and is evidenced by a certificate, perfection is achieved by delivery of the certificate to the Collateral Agent together with a duly executed membership interest transfer instrument endorsed in blank, in the same manner as described in clause (i) above.
(B) To the extent any such LLC interest has not been opted into Article 8 treatment (or is not evidenced by a certificate), such interest constitutes a "general intangible" under UCC §9-102(a)(42), and perfection is achieved by the filing of a UCC-1 Financing Statement as described in Section 3 above and Section 4.2 above.
(iii) The Opinion Back-Up Certificate represents that the operating agreements for each of Nexford Engineered Systems, LLC, Nexford Manufacturing Services, LLC, Nexford Properties, LLC, and Ridgepoint Specialty Coatings, LLC contain provisions expressly opting the membership interests therein into Article 8 of the applicable Uniform Commercial Code, and that certificates representing such membership interests have been issued and delivered to the Collateral Agent. We have relied upon such representations without independent verification.
4.6 Perfection by Delivery — Instruments (Intercompany Note)
To the extent that the Intercompany Note constitutes an "instrument" within the meaning of UCC §9-102(a)(47), and to the extent that the original executed Intercompany Note has been delivered to, and is in the physical possession of, the Collateral Agent (or its designated agent) in the State of New York, the security interest therein is perfected by possession under UCC §9-313(a).
We note that while a security interest in an instrument may also be perfected temporarily by filing a financing statement under UCC §9-312(a), perfection by possession provides priority over a security interest perfected only by filing, pursuant to UCC §9-330(d). Accordingly, so long as the Collateral Agent maintains continuous possession of the original executed Intercompany Note, the security interest therein will be perfected by the method that provides the highest available priority under Article 9 of the NY UCC.
4.7 Perfection by Filing — Intellectual Property
The filing of the UCC-1 Financing Statements described in Section 3 above perfects the security interests in general intangibles constituting intellectual property — including patents, patent applications, trademarks, trademark applications, copyrights, copyright applications, trade secrets, domain names, and related intellectual property rights of the Grantors described in the intellectual Property Security Agreement — to the extent that such security interests can be perfected by the filing of a financing statement under Article 9 of the NY UCC.
Important Caveat Regarding Federal Filing Requirements: This opinion does not address the effect or necessity of filings with the United States Patent and Trademark Office ("USPTO") or the United States Copyright Office to perfect security interests in federally registered patents, patent applications, trademarks, trademark applications, or registered copyrights. Federal intellectual property recording statutes, including 35 U.S.C. §261 (patents), 15 U.S.C. §1060 (trademarks), and 17 U.S.C. §205 (copyrights), may preempt or supplement the perfection and priority rules of Article 9 of the UCC with respect to such assets. Separate analysis under the applicable federal statutes is required to determine whether additional filings with the USPTO or the U.S. Copyright Office are necessary or advisable to perfect security interests in such federally registered intellectual property, and this opinion should not be relied upon as addressing such matters. See Section 5.3 below for additional qualifications.
4.8 Priority. Assuming (a) that no other party has, as of the date hereof, a prior perfected security interest, a prior claim, or other prior right in the Collateral (other than liens being released at closing as described below), (b) that the UCC search reports described in Section 2.1(k) accurately reflect all effective financing statements and other UCC filings against the Grantors in the applicable Filing Offices as of the dates of such reports, and (c) that the UCC-3 Termination Statements described below are duly filed and become effective, the security interests described herein, upon perfection as described in Sections 4.2 through 4.7, will constitute first-priority security interests in the Collateral, subject in each case to the qualifications and limitations set forth in Section 5 below (including, without limitation, the priority limitations set forth in Section 5.6).
In connection with the closing of the Term Loan B Facility on the date hereof, Atlas Meridian Bank, N.A. (the prior secured lender to the Borrower and certain of the Guarantors) has delivered a Lien Release Authorization Letter dated March 27, 2025, authorizing the filing of UCC-3 Termination Statements terminating all existing UCC-1 financing statements naming Atlas Meridian Bank, N.A. as secured party and any of the Grantors as debtor, in each case filed in the applicable Filing Offices in Delaware, Illinois, Pennsylvania, South Carolina, Texas, and Michigan. Such UCC-3 Termination Statements have been prepared and authorized for filing, and are expected to be filed on or before March 31, 2025. Upon the effective filing of such UCC-3 Termination Statements, the prior security interests of Atlas Meridian Bank, N.A. in the Collateral will be terminated, and no prior perfected security interests will exist in the Collateral to our knowledge (based solely on the UCC search reports reviewed by us and the certifications in the Opinion Back-Up Certificate).
5. Qualifications, Assumptions, Exceptions, and Limitations
The opinions expressed herein are subject to the following qualifications, assumptions, exceptions, and limitations:
5.1 General Qualifications
(a) Governing Law. This opinion is limited to the laws of the State of New York (including the NY UCC as in effect in the State of New York on the date hereof) and, to the extent relevant solely with respect to the mechanics of filing UCC-1 financing statements and the effectiveness of such filings in the applicable Filing Offices, the applicable provisions of the Uniform Commercial Code as enacted in the filing jurisdictions listed in Section 3 above (Delaware, Illinois, Pennsylvania, South Carolina, Texas, and Michigan). We express no opinion as to the laws of any other jurisdiction, including, without limitation, the laws of any foreign jurisdiction, or any federal laws of the United States (except to the extent, if any, that federal law is referenced expressly herein).
(b) Real Property Exclusion. This opinion does not address perfection of security interests in real property, fixtures affixed to real property (except to the extent that such fixtures are covered by fixture filings, which are not addressed in this opinion), mineral rights, timber to be cut, or any other assets to the extent the NY UCC does not govern perfection of security interests therein. We express no opinion regarding the recording or filing of mortgages, deeds of trust, or fixture filings in any county recording office or other local filing office.
(c) Continuation Statements. We have assumed that, at all times from and after the filing of the UCC-1 Financing Statements described in Section 3 above, appropriate continuation statements (UCC-3 continuation statements) will be timely filed within the five-year period prescribed by UCC §9-515(a) and (c) to maintain the effectiveness of such financing statements, and that such continuation statements will be filed in the correct Filing Office within the six-month window preceding the expiration of each financing statement's five-year effectiveness period. Failure to file timely continuation statements will result in the lapse of such financing statements and the loss of perfection by filing.
(d) Maintenance of Possession and Control. We have assumed that the Collateral Agent will maintain continuous physical possession of all certificated securities, stock powers, membership interest transfer instruments, and instruments (including the Intercompany Note) delivered to it pursuant to the Security Documents, and that the Deposit Account Control Agreements and Securities Account Control Agreements will remain in full force and effect and will not be terminated, modified, or amended in any manner that would impair the Collateral Agent's "control" over the applicable deposit accounts, securities accounts, or investment property.
5.2 Excluded Collateral / Limitations on Perfection by Filing
Our opinions regarding perfection by filing of UCC-1 Financing Statements do not extend to, and we express no opinion with respect to the perfection of security interests in, any of the following categories of Collateral:
(a) Deposit accounts (as defined in UCC §9-102(a)(29)), which can be perfected only by control pursuant to UCC §9-312(b)(1) and are addressed in Section 4.3 above;
(b) Letter-of-credit rights (as defined in UCC §9-102(a)(51)), which can be perfected only by control pursuant to UCC §9-312(b)(2), except to the extent such letter-of-credit rights constitute "supporting obligations" (as defined in UCC §9-102(a)(78)) that are automatically perfected upon perfection of the related obligation under UCC §9-308(d);
(c) Money (as defined in UCC §1-201(b)(24)), which can be perfected only by possession pursuant to UCC §9-312(b)(3);
(d) Motor vehicles and other goods covered by a certificate of title statute, which can be perfected only by notation on the certificate of title under UCC §9-311(a)(2) and the applicable certificate of title statute of the jurisdiction in which such vehicle is titled;
(e) Commercial tort claims (as defined in UCC §9-102(a)(13)) that are not described with sufficient specificity in the financing statements or the Security Agreement to satisfy the requirements of UCC §9-108(e);
(f) Any Collateral with respect to which the Security Agreement or the Credit Agreement provides for an express exclusion from the collateral package, including, without limitation:
(i) motor vehicles with a fair market value or book value below $250,000 per vehicle;
(ii) letter-of-credit rights with a face amount of less than $1,000,000; and
(iii) commercial tort claims with an amount in controversy or reasonably estimated value of less than $2,500,000; and
(g) Any property of a type or in a jurisdiction as to which the NY UCC does not provide for perfection by the filing of a financing statement, and for which the methods of perfection described in Sections 4.3 through 4.6 above have not been employed.
5.3 Federal intellectual Property Filing Caveat
This opinion does not address the effect or necessity of filings with the United States Patent and Trademark Office or the United States Copyright Office to perfect security interests in federally registered patents, patent applications, trademarks, trademark applications, or registered copyrights. The interplay between Article 9 of the UCC and federal intellectual property recording statutes — including, without limitation, 35 U.S.C. §261, 15 U.S.C. §1060, and 17 U.S.C. §205 — may affect the perfection and priority of security interests in such assets, and separate analysis under federal law is required. We express no opinion regarding whether additional filings with the USPTO or the U.S. Copyright Office are necessary to achieve or maintain perfection of security interests in intellectual property registered under such federal statutes, or the consequences of any failure to make such filings. The opinions expressed in Section 4.7 are limited solely to perfection under Article 9 of the NY UCC and do not address perfection or priority under any federal statute.
5.4 After-Acquired Property
The security interests granted under the Security Documents extend to after-acquired Collateral to the extent provided in the Security Documents and permitted by UCC §9-204(a). Such security interests will attach automatically upon the applicable Grantor's acquisition of rights in such after-acquired Collateral, and, to the extent perfection is achieved by the methods described in this opinion (including by filing of the UCC-1 Financing Statements described in Section 3), such security interests will be perfected upon attachment without the need for additional filing or other action, subject to the following exceptions:
(a) Commercial tort claims arising after the date hereof must be specifically described and added to the schedules to the Security Agreement (and, to the extent necessary, the collateral description in the applicable financing statement must be amended) in accordance with UCC §9-108(e) and the terms of the Security Agreement;
(b) New deposit accounts opened at financial institutions after the date hereof will require the execution and delivery of additional Deposit Account Control Agreements (or amendments to existing control agreements) to achieve perfection by control; and
(c) New securities accounts opened at securities intermediaries after the date hereof will require the execution and delivery of additional Securities Account Control Agreements (or amendments to existing control agreements) to achieve perfection by control.
5.5 Proceeds. A security interest attaches to identifiable proceeds of Collateral automatically under UCC §9-315(a)(2). A perfected security interest in proceeds is automatically perfected under UCC §9-315(c) if the security interest in the original Collateral was perfected, but such automatic perfection is subject to the limitations set forth in UCC §9-315(d), which provides that a security interest in proceeds is perfected beyond the twenty (20) day period following the debtor's receipt of the proceeds only if:
(a) a filed financing statement covers the original Collateral and the proceeds are collateral in which a security interest may be perfected by filing in the same office where the financing statement was filed, and the proceeds are not acquired with cash proceeds;
(b) the proceeds are identifiable cash proceeds; or
(c) the security interest in the proceeds is perfected otherwise than by filing (e.g., by control or possession) when the security interest attaches to the proceeds or within twenty (20) days thereafter.
For certain types of proceeds, including deposit accounts and investment property that constitute proceeds of other Collateral, continued perfection beyond the twenty (20) day period may require the Collateral Agent to take additional steps, such as obtaining control over such deposit accounts or investment property. We express no opinion regarding the continued perfection of a security interest in any particular category of proceeds beyond the twenty (20) day period described in UCC §9-315(d), except to the extent such proceeds fall within one of the categories addressed in Sections 4.2 through 4.7 above and perfection is maintained by the applicable method described therein.
5.6 Priority Limitations
The priority opinions expressed in Section 4.8 are subject to the following exceptions and limitations:
(a) Liens and security interests that may be senior by operation of law, including, without limitation, statutory liens (e.g., mechanics' liens, materialmen's liens, warehousemen's liens, carriers' liens, and other possessory or statutory liens arising by operation of state or federal law);
(b) Purchase money security interests that are perfected in compliance with UCC §9-324, which may have priority over a prior perfected security interest in the same collateral;
(c) The liens of collecting banks under UCC §4-210 and the rights of intermediary banks and payor banks under Articles 3 and 4 of the NY UCC;
(d) The rights of buyers in the ordinary course of business under UCC §9-320(a), who take free of a security interest created by the buyer's seller, even though the security interest is perfected and the buyer knows of its existence;
(e) The rights of holders in due course of negotiable instruments under UCC §9-331(a), who take free of a security interest in such instruments;
(f) The rights of lessees in the ordinary course of business under UCC §9-321;
(g) Setoff rights of depository banks with respect to deposit accounts maintained at such banks, including common law and statutory rights of setoff and recoupment;
(h) Federal tax liens arising under Section 6321 of the Internal Revenue Code of 1986, as amended, to the extent that the priority of such liens is determined under Sections 6322 and 6323 of the Internal Revenue Code and such liens may have priority over subsequently filed financing statements;
(i) Liens arising under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including liens under ERISA §4068;
(j) Any security interest in favor of a person who is in possession of a negotiable document of title, to the extent of the goods covered by such document, under UCC §9-331(a); and
(k) Other liens and encumbrances arising by operation of law and not subject to the priority rules of Article 9 of the NY UCC.
5.7 Bankruptcy and Insolvency
The opinions expressed herein are subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent conveyance, fraudulent transfer, and similar laws affecting the rights and remedies of creditors generally, including, without limitation:
(a) Title 11 of the United States Code (the "Bankruptcy Code"), including (i) the automatic stay provisions of Section 362 of the Bankruptcy Code, which may limit the Collateral Agent's ability to exercise remedies upon the filing of a bankruptcy petition, (ii) the avoidance powers under Sections 544 (trustee as lien creditor and bona fide purchaser), 545 (avoidance of statutory liens), 547 (preferences), 548 (fraudulent transfers), and 549 (post-petition transactions) of the Bankruptcy Code, which may affect the validity, enforceability, or priority of security interests granted within certain statutory look-back periods or under certain conditions, and (iii) the provisions of Section 552 of the Bankruptcy Code, which may limit the extent to which a security interest extends to property acquired by the debtor after the commencement of a bankruptcy case;
(b) Applicable state fraudulent conveyance and fraudulent transfer statutes, including the New York Uniform Voidable Transactions Act (Debtor and Creditor Law §§270-281) and equivalent statutes in other jurisdictions in which any Grantor is organized or has assets; and
(c) Other applicable federal and state insolvency, reorganization, assignment for the benefit of creditors, and similar laws affecting the rights of creditors generally.
We express no opinion as to the effect of any of the foregoing laws on the security interests described herein or on the Collateral Agent's ability to enforce such security interests.
5.8 Choice of Law
The opinions expressed herein assume that the choice of New York law as the governing law of the Security Documents is valid and enforceable under applicable conflicts of laws principles, including UCC §§1-301 and 9-301 through 9-307. To the extent that the laws of a jurisdiction other than New York govern the creation, attachment, perfection, or priority of a security interest in any item of Collateral — whether by reason of the location of such Collateral, the nature of such Collateral, or the application of mandatory choice-of-law rules — we express no opinion thereon.
For purposes of determining the law governing perfection by filing of UCC-1 Financing Statements, perfection is governed by the law of the jurisdiction in which the debtor is "located" within the meaning of UCC §9-301(1). For each Grantor that is a "registered organization" (as defined in UCC §9-102(a)(71)), such Grantor is located in its state of organization under UCC §9-307(e). We have assumed, based upon the Opinion Back-Up Certificate and our review of organizational documents, that each Grantor is a registered organization and that its state of organization is as set forth in Schedule A hereto.
5.9 Reliance on Other Opinions
In rendering the opinions expressed herein, we have relied upon the following opinions delivered concurrently herewith, without independent investigation or verification of the matters addressed therein:
(a) Illinois Law. To the extent that matters of Illinois law are relevant to the perfection of security interests in Collateral of Nexford Manufacturing Services, LLC (an Illinois limited liability company), including the effectiveness of the UCC-1 Financing Statement filed with the Illinois Secretary of State, we have relied upon the opinion of Hargrove & Whitmore LLP, 181 West Madison Street, Suite 4200, Chicago, Illinois 60602 (Robert Kimura, lead partner), delivered concurrently herewith. We express no independent opinion as to matters of Illinois law.
(b) Delaware Entity Law. To the extent that matters of Delaware entity law are relevant to the authority and capacity of the Delaware-organized Grantors (the Borrower, Granite Peak NIH Holdings, LLC, Nexford Precision Components, Inc., Nexford Engineered Systems, LLC, Nexford Coatings & Surface Technologies, Inc., Nexford Properties, LLC, and Nexford International Holdings, Inc.) to execute, deliver, and perform the Security Documents and to grant security interests in the Collateral, we have relied upon the opinion of Briarcliff Legal Group PA, 1201 North Market Street, Suite 1100, Wilmington, Delaware 19801 (Catherine Ellsworth, lead partner), delivered concurrently herewith. We express no independent opinion as to matters of Delaware corporate or limited liability company law.
(c) Pennsylvania, South Carolina, Texas, and Michigan Law. This opinion does not address matters of Pennsylvania, South Carolina, Texas, or Michigan law except to the extent that the NY UCC governs perfection and priority of security interests in Collateral of Grantors organized in those states. With respect to the mechanics of filing UCC-1 Financing Statements in the filing offices of those states (the Pennsylvania Department of State, the South Carolina Secretary of State, the Texas Secretary of State, and the Michigan Department of State), we have assumed that the applicable Uniform Commercial Code provisions in those jurisdictions are substantially identical to the corresponding provisions of the NY UCC with respect to filing mechanics, filing office procedures, the effectiveness of filed financing statements, and the sufficiency of the debtor's name on such financing statements. We express no opinion regarding any provision of the laws of those states that may differ from the NY UCC in any material respect.
6. Limitations on Use and Reliance
This opinion is rendered solely for the benefit of:
(a) Crescent Harbor Bank, N.A., in its capacities as Collateral Agent and Administrative Agent under the Credit Agreement;
(b) each Lender party to the Credit Agreement as of the date hereof, including Ironwood Capital Markets, LLC, Northvane Securities, Inc., Ridgeline Asset Management, LP, Halcyon Credit Partners, LLC, Verdant Institutional Investors, LP, Cascadia Loan Fund III, LP, Bluewater Fixed Income Fund, LP, and each other Lender party to the Credit Agreement on the date hereof; and
(c) each successor, assign, and participant of the foregoing to the extent permitted under the Credit Agreement,