Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the treatment of Nexford Industrial Holdings Inc.'s ("Nexford" or the "Borrower") Canadian subsidiaries — Nexford Canada Holdings ULC ("NCH ULC") and Nexford Canada Manufacturing, Inc. ("NCM") — under the proposed $1,400,000,000 Senior Secured Term Loan B credit facility (the "Credit Facility") with Crescent Harbor Bank, N.A. acting as Administrative A

II. Overview of Canadian Subsidiary Structure A. Corporate Organizational Chain Based on our review of the organizational documents, secretary's certificates, good standing certificates, and related due diligence materials provided by Nexford's in-house counsel and treasury team, the corporate organizational chain relevant to the Canadian subsidiaries is as follows: Granite Peak Capital Fund IV, LP (a Delaware limite

III. Treatment Under the Credit Agreement — Foreign Subsidiary Exclusions A. Definition of "Foreign Subsidiary" Under the proposed Credit Agreement (Section 1.01, "Definitions"), a "Foreign Subsidiary" is defined as any Subsidiary of the Borrower that is organized under the laws of a jurisdiction other than the United States, any state thereof, or the District of Columbia. Both NCH ULC (organized under the laws of Br

IV. Security and Pledge Limitations — The 65% / 100% Rule A. IRC § 956 Background and Rationale The limitation on the pledge of CFC equity to 65% of voting stock is one of the most well-established conventions in the U.S. leveraged loan market. The rationale is rooted in IRC § 956 of the Code, which addresses the treatment of investments in "United States property" by controlled foreign corporations. Under IRC § 956,

V. Guarantee Exclusion Analysis A. Rationale for Excluding Foreign Subsidiaries from Guarantee It is customary in U.S. leveraged finance transactions — and virtually universal in the sponsor-backed Term Loan B market — to exclude foreign subsidiaries from the guarantee package. The reasons for this exclusion are both tax-driven and practical: (i) IRC § 956 deemed dividend issue. A guarantee by a CFC of the obligation

VI. Intercompany Loan Considerations A. Existing Intercompany Loans Based on our review of the intercompany loan documentation and related due diligence materials provided by Priya Mehta, Vice President, Treasury of Nexford, the following intercompany loan arrangements are currently in place within the Canadian subsidiary structure: (i) Nexford to NIH Intl: Nexford has made intercompany loans to NIH Intl, which in tu

VII. Perfection and Enforcement Considerations — Canadian Assets A. No Canadian Law Security Being Taken The transaction does not contemplate any security interest filings or registrations under Canadian provincial personal property security legislation. No General Security Agreement, debenture, or other Canadian-law collateral document will be executed by NCH ULC or NCM. Specifically: (i) No registrations will be ma