CALDERWOOD & HARKNESS LLP Attorneys at Law
120 South LaSalle Street, Suite 4500 Chicago, Illinois 60603
Telephone: (312) 555-7800 Facsimile: (312) 555-7801 www.calderwoodharkness.com
July 11, 2023
Via Email and U.S. Mail
Philip M. Stanhope, Esq. General Counsel Nexford Industrial Holdings Inc. 4200 West Lake Shore Drive, Suite 800 Chicago, Illinois 60604
Re: Engagement of Calderwood & Harkness LLP — Proposed Asset Acquisition of Pinnacle Metal Fabricators LLC
Dear Mr. Stanhope:
1. Introduction and Purpose
Calderwood & Harkness LLP ("we," "us," "the Firm," or "C&H") is pleased to confirm our engagement to represent Nexford Industrial Holdings Inc. ("Nexford," "NIH," or "you"), a Delaware corporation, as buyer's counsel in connection with the proposed acquisition of substantially all of the assets of Pinnacle Metal Fabricators LLC ("Pinnacle" or "PMF"), an Indiana limited liability company with its principal office at 1127 Industrial Parkway, Hammond, Indiana 46320. We understand that Nexford and Pinnacle have executed a letter of intent on or about July 11, 2023, setting forth the principal terms and conditions upon which the parties intend to negotiate and consummate the proposed transaction.
This engagement letter sets forth the terms and conditions of the Firm's engagement by Nexford in connection with the foregoing matter. By countersigning and returning a copy of this letter, Nexford agrees to the terms described herein. This letter supersedes any and all prior oral or written understandings, discussions, or communications between the Firm and Nexford regarding the scope, terms, and conditions of representation in this matter. We are delighted to have the opportunity to work with you and the Nexford team on this transaction, and we look forward to a productive and successful engagement.
2. Scope of Representation
The Firm will serve as Nexford's primary outside legal counsel in connection with the proposed asset acquisition described above (the "Transaction"). Without limiting the generality of the foregoing, our representation will include the following services:
(a) Transaction Documentation. Structuring and negotiation of the definitive Asset Purchase Agreement and all ancillary transaction documents, including without limitation the bill of sale, assignment and assumption agreement, escrow agreement, transition services agreement, non-competition and non-solicitation agreements, and seller closing certificates and deliverables.
(b) Legal Due Diligence. Legal due diligence review of Pinnacle's corporate and organizational records, material contracts (including customer and supplier agreements, leases, and licensing arrangements), real property interests (including owned and leased real estate), employee and labor matters, environmental compliance history, intellectual property assets, tax matters, and pending or threatened litigation and regulatory proceedings.
(c) Coordination with Financial and Environmental Advisors. Coordination with Nexford's financial diligence advisor, Whitfield & Pryor LLP (Robert C. Underhill, Engagement Partner), and Nexford's environmental consultant, Clearpath Environmental Advisors Inc. (Elena M. Rivas, Project Manager), as applicable, to ensure that legal, financial, and environmental due diligence workstreams are appropriately integrated and that issues identified in one workstream are surfaced and addressed across the transaction team.
(d) Seller's Counsel Negotiations. Negotiation and coordination with Seller's counsel, Halverson Burke & Crane LLP (Thomas A. Gilroy, Lead Partner), with respect to all aspects of the Transaction, including the negotiation of the definitive purchase agreement, disclosure schedules, and ancillary agreements.
(e) Lender Consent. Review, negotiation, and coordination of lender consent from Greystone National Bank, N.A. under Section 7.04 of the Amended and Restated Senior Secured Revolving Credit Agreement dated February 10, 2023 (originally dated March 15, 2021), by and among Nexford, certain of its subsidiaries, and Greystone National Bank, N.A., as administrative agent and lender, as required for acquisitions in which the aggregate consideration exceeds $5,000,000.
(f) Representations and Warranties Insurance. Coordination with Ashford & Meridian Insurance Brokers LLC (Nathan R. Caldwell, Account Executive) regarding the placement and binding of a representations and warranties insurance policy in connection with the Transaction, including review and negotiation of the insurance policy terms, exclusions, and related underwriting materials.
(g) Closing Mechanics. Preparation of closing checklists, funds flow memoranda, signature pages, and management of all closing mechanics, including coordination of closing deliverables among the parties, escrow agent, lender, and title company as applicable.
(h) Post-Closing Matters. Post-closing matters directly related to the Transaction, including without limitation purchase price allocation support, escrow release procedures, preparation or review of post-closing adjustment calculations, and transition-related matters arising under the Transaction documents.
Notwithstanding the foregoing, the scope of this engagement does not include any of the following matters, each of which would require a separate engagement (and, in certain cases, the retention of separate specialized counsel or advisors):
(i) Tax Advice. The Firm will not provide tax advice in connection with the Transaction. Nexford should consult its own tax advisors with respect to the tax structuring, tax consequences, and tax reporting obligations arising from the Transaction, including without limitation the allocation of the purchase price among the acquired assets for federal, state, and local income tax purposes.
(ii) Environmental Remediation. The Firm will not provide advice regarding environmental remediation, cleanup, or corrective action, whether arising from conditions identified during due diligence or otherwise.
(iii) Unrelated Regulatory Filings. The Firm will not prepare or file any regulatory filings or applications that are not directly related to the Transaction, including without limitation Hart-Scott-Rodino premerger notification filings (if applicable) or state regulatory approvals not necessitated by the asset transfer.
(iv) General Employment Law. The Firm's representation does not extend to employment law advice beyond the negotiation and drafting of specific transaction-related employment, consulting, and restrictive covenant agreements contemplated by the Transaction.
(v) Litigation. Any litigation, arbitration, or other dispute resolution proceedings arising out of, related to, or in connection with the Transaction would require a separate engagement letter and are not included within the scope of this engagement.
We understand that Nexford is a portfolio company of Bramblewood Capital Partners, LP ("Bramblewood"). This engagement is with Nexford Industrial Holdings Inc. only. The Firm does not represent Bramblewood or any of its general partners, limited partners, affiliates, management companies, parallel funds, or other portfolio companies in connection with this Transaction. Should Bramblewood or any of its affiliates desire legal representation from the Firm in connection with this Transaction or any other matter, a separate engagement letter would need to be executed.
3. Staffing
The following attorneys will be primarily responsible for the Firm's work on this engagement:
Oliver Mackenzie — Responsible Partner (Mergers & Acquisitions). Mr. Mackenzie will have overall responsibility for the engagement and will serve as the primary relationship partner for this matter. Mr. Mackenzie will be involved in deal structuring, strategic negotiations, and oversight of all material work product.
Harrison Wexford — Billing Partner (Mergers & Acquisitions). Mr. Wexford will serve as the billing partner for the engagement and will be actively involved in deal structuring, negotiation strategy, and review of key transaction documents, including the definitive Asset Purchase Agreement and material ancillary agreements.
Naomi Petersen — Lead Associate (Mergers & Acquisitions). Ms. Petersen will serve as the day-to-day lead associate on the engagement, managing the due diligence process, coordinating document drafting and review, preparing initial drafts of transaction documents, and overseeing closing coordination. Ms. Petersen will serve as the primary day-to-day contact for the Nexford team on operational and diligence-related matters.
Ryan Kowalski — Working Associate (Mergers & Acquisitions). Mr. Kowalski will assist Ms. Petersen with due diligence review and analysis, ancillary document preparation, closing checklist management, funds flow coordination, and other matters as directed.
From time to time, additional attorneys or paraprofessionals from the Firm may be called upon to work on discrete aspects of the engagement as the needs of the matter require. This may include attorneys from the Firm's real estate, intellectual property, environmental, labor and employment, or finance practice groups, as well as paralegals and legal assistants. Nexford will be informed in advance of any material changes to the core transaction team described above. We may also utilize junior attorneys and paralegals for discrete, well-defined tasks to promote efficiency and manage costs. In all cases, the work of such individuals will be supervised by the attorneys listed above.
4. Fee Arrangements and Billing Rates
The Firm will bill Nexford on an hourly basis for all professional services rendered in connection with this engagement. The current hourly rates for the primary team members assigned to this matter are as follows:
The foregoing rates are the Firm's standard rates for the professionals identified and are subject to annual adjustment, which typically takes effect on January 1 of each calendar year. The Firm will provide Nexford with advance written notice of any changes to the applicable billing rates. If additional attorneys from the Firm's specialist practice groups are engaged to assist with discrete aspects of the Transaction, their time will be billed at their then-current standard hourly rates, which will be communicated to Nexford at the time of their involvement.
The Firm does not provide fee estimates, fee caps, or fixed-fee arrangements for transactional engagements of this nature, as the ultimate scope and complexity of the work depends on numerous factors outside the Firm's control, including the volume and condition of diligence materials, the pace and tenor of negotiations with Seller's counsel, the complexity of lender consent and insurance placement processes, and the timing and mechanics of closing. However, we will endeavor at all times to staff the matter efficiently and to manage costs in a manner consistent with the scope and objectives of the Transaction. Based on the anticipated scope of the Transaction as currently described, and drawing on the Firm's experience with comparable recent asset acquisition engagements, we currently anticipate that total legal fees for this engagement will fall in the range of $350,000 to $500,000. This estimate is provided for planning purposes only and is not intended as a cap, ceiling, or binding commitment. Actual fees may be higher or lower than this range depending on the complexity of negotiations, diligence findings, third-party dynamics, and closing logistics, among other factors. We will keep you apprised of the status of fees on an ongoing basis and will promptly communicate any material developments that may affect the anticipated fee range.
Invoices for professional fees and disbursements will be rendered on a monthly basis and will include reasonable detail regarding the services performed, the professionals involved, and the time expended. All invoices are due and payable within thirty (30) days of the date of the invoice. The Firm reserves the right to suspend work on the engagement if invoices remain unpaid beyond sixty (60) days without prior arrangement between the Firm and Nexford regarding an alternative payment schedule. Any such suspension of services will be communicated in writing to Nexford before taking effect.
5. Expenses and Disbursements
In addition to professional fees for legal services, the Firm will bill Nexford for reasonable out-of-pocket expenses and disbursements incurred in connection with the engagement. Such expenses may include, without limitation, the following:
(a) Travel expenses, including airfare, ground transportation, hotel accommodations, and meals, incurred in connection with site visits to Pinnacle's facilities, in-person due diligence sessions, negotiation meetings, or closing meetings;
(b) Filing fees, recording fees, and search fees, including fees for UCC searches, lien searches, judgment searches, litigation searches, tax lien searches, and other public record searches conducted in connection with the Transaction;
(c) Document reproduction, printing, and binding charges;
(d) Overnight courier, express delivery, and postage charges;
(e) Computerized legal research charges, including charges for Westmark Data Systems, Sundial Solutions, and similar research platforms; and
(f) Long-distance telecommunications charges.
For the avoidance of doubt, third-party vendor costs — including without limitation fees and expenses charged by Nexford's financial diligence advisor (Whitfield & Pryor LLP), environmental consultant (Clearpath Environmental Advisors Inc.), insurance broker (Ashford & Meridian Insurance Brokers LLC), and any other third-party consultants or advisors retained by Nexford — are not included in the Firm's billing and will be billed directly by such vendors to Nexford pursuant to their separate engagement arrangements.
6. Conflicts of Interest
The Firm has conducted a conflicts check in accordance with its standard procedures and applicable rules of professional conduct and has determined that there are no current conflicts of interest that would prevent the Firm from undertaking this engagement on behalf of Nexford.
We wish to disclose, however, that the Firm has in the past represented, and may in the future represent, other parties — including parties that may be competitors of, or that may have interests adverse to, Nexford — in matters that are unrelated to the Transaction. By countersigning this letter, Nexford acknowledges and consents to such representations, provided that they are not substantially related to the subject matter of this engagement and do not involve the use of Nexford's confidential information. This consent does not extend to any representation that would create an actual conflict of interest with respect to the Transaction itself.
The Firm confirms that it does not currently represent Pinnacle Metal Fabricators LLC, any of its members (including Gerald T. Brennan, Sandra L. Brennan, and Derek J. Kopp), or Halverson Burke & Crane LLP in any matter, and the Firm is not aware of any circumstances that would give rise to a conflict of interest in connection with this engagement as of the date hereof.
If an actual conflict of interest arises during the course of this engagement, the Firm will promptly notify Nexford in writing and will take appropriate steps to address the conflict in accordance with applicable rules of professional conduct. Such steps may include, among other measures, the implementation of ethical screens, the engagement of separate counsel for specific matters, or, if necessary, withdrawal from the engagement in whole or in part.
7. Client Identity and Communications
The Firm's client in this engagement is Nexford Industrial Holdings Inc. Our representation does not extend to any individual officer, director, employee, or equity holder of Nexford, nor to Bramblewood Capital Partners, LP, or any of Bramblewood's general partners, limited partners, affiliates, management companies, parallel funds, or other portfolio companies. Any attorney-client privilege arising from this engagement belongs to Nexford and may be waived only by Nexford through its duly authorized representatives.
The primary client contacts for purposes of this engagement shall be:
(a) Philip M. Stanhope, General Counsel, Nexford Industrial Holdings Inc. — for all legal and engagement-related matters; and
(b) Danielle K. Cho, Chief Financial Officer, Nexford Industrial Holdings Inc. — for financial, funding, and closing-related matters.
We understand that Nexford may authorize the Firm to communicate with Catherine E. Moreau, Deal Partner at Bramblewood Capital Partners, LP, regarding the status and progress of the Transaction. The Firm is prepared to include Ms. Moreau in communications and provide her with updates to the extent authorized by Nexford. However, all engagement-related instructions, approvals, and authorizations must come from duly authorized representatives of Nexford, and the Firm will take direction exclusively from Nexford with respect to all matters within the scope of this engagement.
All communications between the Firm and Nexford in connection with this engagement are intended to be privileged and confidential, including without limitation communications made for the purpose of seeking or rendering legal advice. We encourage Nexford and its personnel to clearly mark communications with the Firm as "Attorney-Client Privileged and Confidential" and to limit the distribution of such communications to those individuals with a need to know, in order to preserve the applicable privileges.
8. Confidentiality
The Firm will maintain the confidentiality of all non-public information received from or on behalf of Nexford in connection with this engagement, in accordance with the Firm's ethical obligations under the applicable rules of professional conduct and its internal information security policies. The Firm will use such confidential information solely for the purpose of providing legal services to Nexford in connection with the Transaction and will not disclose such information to any third party without Nexford's prior written consent, except as may be required by applicable law, court order, subpoena, or professional obligation.
The Firm's confidentiality obligations under this engagement letter shall survive the termination or completion of this engagement and shall continue in full force and effect thereafter, regardless of the reason for termination or the outcome of the Transaction.
9. Document Retention
The Firm will maintain all files and records related to this engagement in accordance with the Firm's standard document retention policies and procedures, which comply with applicable rules of professional conduct and legal requirements. During the pendency of the engagement, Nexford shall have reasonable access to its files upon request.
Upon completion or termination of the engagement, Nexford may request the return or transfer of original documents provided by Nexford to the Firm. The Firm may retain copies of such documents, as well as copies of the Firm's own work product, for its records and in accordance with its document retention policies.
The Firm's standard retention period for closed matter files is seven (7) years from the date of file closure. After the expiration of this retention period, the Firm may destroy or dispose of its files relating to this engagement — including both paper and electronic files — without further notice to Nexford. If Nexford wishes to receive its files or any portion thereof prior to destruction, it should notify the Firm in writing before the expiration of the retention period.
10. Termination
Either Nexford or the Firm may terminate this engagement at any time upon written notice to the other party. No reason need be stated for termination, provided that the Firm's right to terminate shall be subject to the applicable rules of professional conduct governing withdrawal from representation, including any requirement to obtain court approval where the Firm's withdrawal would affect pending proceedings.
In the event of termination by either party, Nexford will remain responsible for the payment of all fees for professional services rendered and all expenses and disbursements incurred through the effective date of termination. The Firm will render a final invoice promptly following termination, which shall be due and payable in accordance with the terms set forth in Section 4 above.
Upon termination, the Firm will take reasonable steps to protect Nexford's interests, including cooperating with any successor counsel designated by Nexford in the orderly transition of the matter, transferring relevant files and documents, and providing such information as may be reasonably necessary to enable successor counsel to assume responsibility for the engagement.
11. Limitation of Liability
The Firm's aggregate liability to Nexford arising out of or related to this engagement, whether based on breach of contract, tort (including negligence), breach of fiduciary duty, or any other legal theory, shall not exceed the total amount of professional fees actually paid by Nexford to the Firm in connection with this engagement. This limitation of liability applies to all claims, losses, damages, costs, and expenses of any nature whatsoever, whether direct, indirect, incidental, consequential, special, or punitive.
Notwithstanding the foregoing, this limitation of liability shall not apply to any losses, damages, or liabilities arising from the Firm's willful misconduct or gross negligence in the performance of its obligations under this engagement.
12. Governing Law and Dispute Resolution
This engagement letter and the professional relationship between the Firm and Nexford shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles.
Any dispute, claim, or controversy arising out of or relating to this engagement, including without limitation any dispute regarding the Firm's fees, the scope or quality of the Firm's services, or any claim for professional liability, shall be resolved by binding arbitration conducted in New York, New York, in accordance with the commercial arbitration rules of a nationally recognized arbitration organization mutually agreed upon by the parties (or, in the absence of such agreement, the American Arbitration Association). Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The parties agree that the arbitrator(s) shall have the authority to award attorneys' fees and costs to the prevailing party. Notwithstanding the foregoing, the parties may mutually agree in writing to resolve any dispute through an alternative mechanism, including mediation or litigation, in lieu of binding arbitration.
13. Entire Agreement; Amendments
This engagement letter constitutes the entire agreement between the Firm and Nexford with respect to the engagement described herein. It supersedes all prior and contemporaneous discussions, negotiations, proposals, understandings, and agreements, whether written or oral, between the parties regarding the subject matter of this engagement. No representations, warranties, or commitments have been made by either party except as expressly set forth in this letter.
This engagement letter may not be amended, modified, or supplemented except by a written instrument executed by both the Firm and Nexford. No waiver of any provision of this letter shall be effective unless made in writing and signed by the party against whom enforcement of such waiver is sought.
14. Acceptance
We are enthusiastic about the opportunity to represent Nexford in connection with the proposed acquisition of Pinnacle Metal Fabricators LLC, and we are confident that the Firm's experience, resources, and dedication will add meaningful value to the Transaction. We look forward to working closely with you, Ms. Cho, and the broader Nexford team throughout the process.
Please indicate Nexford's acceptance of the terms and conditions of this engagement by countersigning this letter in the space provided below and returning a fully executed copy to the undersigned at your earliest convenience. If you have any questions about the terms of this letter or any aspect of the proposed engagement, please do not hesitate to contact me directly.
We appreciate the trust and confidence that Nexford has placed in Calderwood & Harkness LLP, and we look forward to a successful engagement.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Oliver Mackenzie
Title: Partner, Mergers & Acquisitions
Calderwood & Harkness LLP 120 South LaSalle Street, Suite 4500 Chicago, Illinois 60603 Telephone: (312) 555-7812
Email: omackenzie@calderwoodharkness.com
ACCEPTANCE AND AGREEMENT
The undersigned hereby confirms that Nexford Industrial Holdings Inc. has read, understands, and agrees to the terms and conditions set forth in this engagement letter dated July 11, 2023, and hereby authorizes Calderwood & Harkness LLP to proceed with the engagement described herein.
AGREED AND ACCEPTED:
NEXFORD INDUSTRIAL HOLDINGS INC.
By: ________
Name: Philip M. Stanhope
Title: General Counsel
Date: ________
Enclosures: Calderwood & Harkness LLP Standard Terms and Conditions of Engagement (incorporated herein by reference).
| Attorney / Professional | Role | Hourly Rate |
| Oliver Mackenzie | Partner | $1,050 |
| Harrison Wexford | Partner | $995 |
| Naomi Petersen | Senior Associate | $695 |
| Ryan Kowalski | Associate | $525 |
| Paralegals | Various | $275 – $350 |