Contract analysis

I. Executive Summary This memorandum sets forth the results of our analysis of the Indenture dated as of November 8, 2021 (the "Indenture"), among Nexford Industrial Holdings Inc., a Delaware corporation ("Nexford" or the "Company"), as Issuer, the Guarantors party thereto, and Pinnacle Trust Company, a New York trust company, as Trustee (with its principal corporate trust office located at 101 Park Avenue, New York,

II. Background — The Notes and Indenture A. Overview of the Notes The Notes were issued on November 8, 2021 pursuant to the Indenture. The principal terms of the Notes and the Indenture are summarized below: The Notes rank pari passu in right of payment with all existing and future senior unsecured indebtedness of the Issuer. However, because the Notes are unsecured, they are effectively subordinated to all existing

III. Incurrence Covenants — Limitation on Indebtedness A. General Incurrence Test The Indenture contains an incurrence-based (as opposed to maintenance-based) covenant restricting the ability of the Issuer and its Restricted Subsidiaries to incur additional Indebtedness (as defined in the Indenture). This distinction is significant: an incurrence covenant is tested only at the time new indebtedness is incurred (and,

IV. Restricted Payments Covenant — Dividend Recapitalization Analysis A. Overview of Restricted Payments Covenant The Indenture restricts the ability of the Issuer and its Restricted Subsidiaries to make "Restricted Payments," which are defined under the Indenture to include, among other things: (a) any dividend or distribution on account of equity interests of the Issuer or any Restricted Subsidiary (other than divi

V. Change of Control Provisions A. Definition of Change of Control The Indenture defines "Change of Control" to include one or more of the following triggering events (subject to the specific language of the Indenture): (i) the acquisition, directly or indirectly, by any "person" or "group" (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than one

VI. Covenants Relevant to the Proposed Transaction Beyond the incurrence covenants, restricted payments covenant, and change of control provisions addressed in the preceding sections, the Indenture contains several additional covenants that may be implicated by the proposed transaction. Each is addressed below. A. Limitation on Liens As discussed in Section III.C above, the Indenture restricts the ability of the Issu

VII. Intercreditor Agreement Considerations A. Requirement for Intercreditor Agreement Because the Notes are unsecured and the proposed Term Loan B is secured by first-priority Liens on substantially all assets of the Issuer and the Subsidiary Guarantors, an intercreditor agreement (the "First Lien/Unsecured Intercreditor Agreement" or the "ICA") will be executed and delivered at or prior to closing to govern the rel

VIII. Notice and Procedural Requirements A. Notice to Trustee The Indenture may require the Issuer to provide advance written notice to Pinnacle Trust Company of certain events, including the refinancing of existing credit facilities, the incurrence of new Indebtedness, the grant of Liens on the Issuer's properties and assets, and the making of Restricted Payments. The specific notice requirements, including the requ