Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the change of control provision contained in the third-round draft of the Credit Agreement (the "Credit Agreement") for the $1,400,000,000 senior secured Term Loan B facility among Nexford Industrial Holdings Inc. ("Nexford" or the "Borrower"), the Guarantors party thereto, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent (the "

II. Background — Transaction Structure and Ownership A. The Borrower Nexford Industrial Holdings Inc. is a Delaware corporation headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173. Nexford operates as a diversified industrials and specialty manufacturing platform with operations across seventeen facilities in the United States, Mexico, and Germany. For the twelve-month period ended December 31, 2024,

III. Description of the Change of Control Provision — Current Draft The change of control provision appears in Section 2.05(b)(iv) of the Credit Agreement and incorporates the defined term "Change of Control" set forth in Section 1.01. We describe each of the three trigger prongs below, together with our analysis of the practical and legal implications of each. A. Trigger Prong 1 — Voting Equity Acquisition Threshold

1. Text as Drafted As set forth in clause (a) of the definition of "Change of Control," a Change of Control occurs upon: "the acquisition by any 'person' or 'group' (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than one or more Permitted Holders, of direct or indirect beneficial ownership of more than 35% of the total outstanding Voting Equity Interests of Holdings

2. Analysis. This prong is the primary ownership-based trigger. It is designed to permit continued Granite Peak ownership—and any internal restructurings within the Granite Peak fund family—without triggering a change of control, while capturing the scenario in which an outside third party (whether through a negotiated acquisition, hostile tender, open market purchases, or otherwise) accumulates a blocking or control

1. Text as Drafted Clause (b) of the definition of "Change of Control" provides that a Change of Control occurs if: "Nexford Industrial Holdings Inc. shall at any time cease to be a direct, wholly-owned Subsidiary of Holdings."

2. Analysis. This prong serves as a structural protection for the Lenders. Its purpose is to ensure that the collateral package—which includes the pledge by Holdings of 100% of its equity interests in Nexford—remains effective and complete throughout the life of the facility. It prevents Holdings from selling, transferring, or otherwise disposing of any portion of its equity interest in Nexford, or from permitting th

1. Text as Drafted Clause (c) of the definition of "Change of Control" provides that a Change of Control occurs upon: "the occurrence of a 'Change of Control' (or any analogous event, however denominated or defined) under the Existing Indenture governing the 7.250% Senior Unsecured Notes due 2028 issued by the Borrower."

2. Nature of the Cross-Trigger This provision functions as a cross-trigger. It is not technically a cross-default (which would require an actual default or event of default under the Existing Indenture), but rather a cross-definitional reference: if the factual circumstances satisfy the definition of "Change of Control" in the Existing Indenture, then a "Change of Control" is also deemed to have occurred under the Cr

3. Analysis of the Existing Indenture's Change of Control Provision We have reviewed the Existing Indenture (dated November 8, 2021) and note the following with respect to its change of control definition. The Existing Indenture defines "Change of Control" to include the following events: (a) any "person" or "group" (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), other than "Permitted Ho

IV. Market Comparison — Recent Sponsor-Backed Term Loan B Transactions To contextualize the Nexford Credit Agreement's change of control provision, we have reviewed the change of control provisions in a sample of thirty-seven sponsor-backed Term Loan B transactions that closed or were syndicated during the period from January 2024 through February 2025. These transactions ranged in size from $500,000,000 to $3,200,00

V. Interaction with Other Credit Agreement Provisions A. Interaction with Restricted Payment Covenant The Credit Agreement contains a negative covenant in Section 7.06 restricting the Borrower's ability to make restricted payments, including dividends, distributions, and other payments to equity holders. The principal exceptions include: (i) an annual general basket of $25,000,000 per fiscal year; (ii) a "builder bas

Section 7.04 of the Credit Agreement contains a negative covenant restricting "Fundamental Changes," which are defined to include mergers, consolidations, dissolutions, liquidations, and sales, transfers, or dispositions of all or substantially all of the assets of the Borrower or any Guarantor. Certain Fundamental Changes are permitted, including mergers where the Borrower is the surviving entity, provided no Event

VI. Specific Drafting Recommendations Based on the analysis set forth in Sections III through V above, we recommend the following revisions to the change of control provision in the next mark-up of the Credit Agreement. A. Expand Permitted Holder Definition We recommend revising the definition of "Permitted Holders" in Section 1.01 to expressly include the following: (i) Granite Peak Capital Partners, LP; (ii) Granit

VII. Summary of Recommendations The following table summarizes our recommendations, with reference to the current draft language, proposed revisions, and an assessment of priority level:

VIII. Next Steps Based on the analysis and recommendations set forth in this memorandum, we propose the following next steps:

1. Internal review. Discuss the recommendations set forth herein with Claudia Merritt. If approved, these recommendations will be incorporated into the Calderwood & Harkness marked draft of the Credit Agreement (the "C&H Marked Third Draft"), which we are targeting for circulation to W&G no later than March 18, 2025.

2. Coordination with Sponsor's counsel. Coordinate with Patricia Voss at Kellner Brandt & Associates LLP, counsel to Granite Peak, to confirm Granite Peak's views on (a) the appropriate scope of the Permitted Holder definition, (b) the preferred voting equity threshold (35% vs. 50% vs. compromise position), and (c) whether Granite Peak has any near-term IPO plans that should inform our approach to the IPO carve-out a

3. Permitted Holder comparison chart. Prepare a detailed side-by-side comparison of the "Permitted Holders" definition in the Credit Agreement draft and the "Permitted Holders" definition in the Existing Indenture, identifying all points of divergence and assessing the risk of misalignment. A preliminary comparison is included in Appendix A; we will finalize this chart following the call with Patricia Voss.

4. Intercreditor Agreement review. Review the draft First Lien/Unsecured Intercreditor Agreement, which W&G has indicated will be circulated on or about March 12, 2025, for consistency with the change of control mechanics in the Credit Agreement and the Existing Indenture. We will prepare a separate memorandum addressing the Intercreditor Agreement if significant issues are identified.

5. W&G call. Raise the Prong 3 cross-trigger qualification and other key drafting points on the next call with Margaret Ashby (partner, Whitfield & Gage LLP) and Elaine Prescott (Managing Director, Crescent Harbor Bank, N.A.). This call is currently scheduled for March 14, 2025, at 2:00 p.m. Eastern. We will prepare a brief talking points memorandum in advance of the call outlining our positions and anticipated count