Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the incremental facility provisions contained in the third draft of the Credit Agreement (the "NIH Credit Agreement — Draft 3") expected to be circulated by Whitfield & Gage LLP ("W&G") on March 17, 2025. Our analysis is based on the second draft of the Credit Agreement circulated by W&G on March 5, 2025, updated to reflect the status of ongoing negoti

II. Background and Context A. Transaction Overview 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, serving customers across the aerospace, automotive, energy, and general industrial end-markets. For the twelve-month period ended December 31, 2024, Nexford

III. The Free-and-Clear Basket (Fixed Dollar / EBITDA-Based Basket) A. Structure. Section 2.14(a) of the Credit Agreement provides that the Borrower may request, from time to time after the Closing Date, one or more increases to the existing Term Loan B commitments or additional tranches of term loans, and/or one or more new revolving credit commitments (each, an "Incremental Facility"), in an aggregate principal amo

IV. The Ratio-Based Incurrence Basket A. Structure. Section 2.14(a)(ii) of the Credit Agreement provides that, in addition to the Free-and-Clear Basket described in Section III above, the Borrower may incur unlimited incremental term loans and/or revolving credit commitments, subject to the condition that, after giving pro forma effect to the incurrence of such incremental debt (and the application of proceeds thereo

V. The Most Favored Nation (MFN) Protection A. Overview. Section 2.14(d) of the Credit Agreement contains a most favored nation ("MFN") clause that protects the existing Term Loan B lenders against being economically disadvantaged by the pricing of any incremental term loans incurred within the first twelve months after the Closing Date (i.e., through March 28, 2026). The MFN provision operates as a "spread ratchet"

VI. Incremental Equivalent Debt A. Structure. Section 2.14(b) of the Credit Agreement provides a parallel pathway for the Borrower to incur additional debt outside the four corners of the Credit Agreement itself, through the issuance of what the agreement terms "Incremental Equivalent Debt." Incremental Equivalent Debt encompasses pari passu secured debt, junior lien secured debt, or unsecured debt that is incurred t

VII. Interaction with Existing Indenture Covenants The analysis of incremental capacity under the Credit Agreement cannot be conducted in isolation from the covenants in Nexford's other outstanding debt instruments. Most significantly, the Indenture dated November 8, 2021 (the "Notes Indenture"), governing the $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (the "Existing Notes"), wi

VIII. Summary of Total Incremental Capacity A. Estimated Incremental Capacity at Closing The following table summarizes the estimated incremental borrowing capacity available to Nexford as of the anticipated Closing Date, based on the provisions of the Credit Agreement as currently drafted: Important Notes: (i) Incremental Equivalent Debt shares capacity with the above baskets. The incurrence of Incremental Equivalen