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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 425 Lexington Avenue New York, New York 10017

February 28, 2025

INTERNAL TAX MEMORANDUM

CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared for the internal use of Calderwood & Harkness LLP and its client, Nexford Industrial Holdings Inc. This memorandum contains confidential legal analysis and advice and is not intended for distribution to any third party. Do not distribute, copy, or forward this memorandum or any portion thereof without the prior written authorization of the undersigned or the Responsible Partner identified above.

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I. EXECUTIVE SUMMARY

A. Purpose of Memorandum

This memorandum analyzes the federal and state income tax consequences of the proposed cash dividend distribution of approximately $335,000,000 (the "Distribution") from Nexford Industrial Holdings Inc., a Delaware corporation ("Nexford" or the "Borrower"), to its direct parent and sole shareholder, Granite Peak NIH Holdings, LLC, a Delaware limited liability company ("Holdings"). Following receipt of the Distribution, Holdings will further distribute the cash proceeds to its two members: Granite Peak Capital Fund IV, LP, a Delaware limited partnership ("Fund IV"), which holds a 92% membership interest in Holdings, and GP Fund IV Co-Invest, LP, a Delaware limited partnership (the "Co-Invest Vehicle"), which holds the remaining 8% membership interest in Holdings. Fund IV will receive approximately $308,200,000 of the Distribution, and the Co-Invest Vehicle will receive approximately $26,800,000, in each case subject to the allocation and distribution provisions of the Holdings LLC Agreement.

This memorandum is intended to provide the Banking & Finance team at Calderwood & Harkness LLP with a comprehensive overview of the principal federal and state tax issues arising in connection with the Distribution, to identify areas requiring further factual diligence, and to recommend specific action items necessary to finalize the tax analysis in advance of the anticipated closing date of March 28, 2025. This memorandum does not address the tax consequences of the refinancing itself (including the deductibility of interest on the new Term Loan B facility), the withholding tax obligations applicable to syndicate lenders, or the state and local tax implications associated with the grant of security interests and recording of mortgages on Nexford's real property assets; each of these topics will be addressed in separate memoranda currently in preparation, as described further in Section VII below.

B. Transaction Context

The Distribution is funded from the proceeds of a $1,400,000,000 senior secured term loan B facility (the "Term Loan B") being arranged by Crescent Harbor Bank, N.A., as administrative agent and lead arranger, pursuant to a Credit Agreement expected to be entered into on or about March 28, 2025 (the "New Credit Agreement"). The Term Loan B serves multiple purposes: it refinances existing first lien credit facilities with Atlas Meridian Bank, N.A. (payoff of the outstanding first lien term loan of approximately $879,375,000), funds transaction fees and expenses of approximately $38,625,000, deposits approximately $147,000,000 to Nexford's balance sheet for general corporate purposes, and funds the approximately $335,000,000 Distribution that is the subject of this memorandum.

The proposed transaction represents the second dividend recapitalization undertaken by Nexford since its acquisition by Granite Peak Capital Partners, LP ("Granite Peak" or the "Sponsor") in January 2019. The first dividend recapitalization, completed in November 2021, distributed $275,000,000 to Holdings, which was contemporaneous with the issuance of $250,000,000 in aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (the "Existing Notes") under an indenture with Pinnacle Trust Company, as trustee. The Existing Notes remain outstanding and are not being refinanced as part of the current transaction. Following the closing of the proposed transaction, cumulative distributions to Granite Peak and its co-investors through Holdings will total approximately $610,000,000.

C. Key Conclusions Preview

Based on the analysis set forth in this memorandum, subject to the assumptions and limitations described in Section VI, and pending completion of the outstanding diligence items identified herein, the principal tax conclusions are as follows:

1. Characterization of the Distribution from Nexford to Holdings. The Distribution from Nexford (a C corporation) to Holdings (its sole shareholder) will be characterized in accordance with the three-tier framework of Internal Revenue Code ("IRC" or "Code") Section 301(c): first, as a dividend to the extent of Nexford's accumulated and current earnings and profits ("E&P"); second, as a tax-free return of capital reducing Holdings' adjusted tax basis in its Nexford stock (but not below zero); and third, as gain from the sale or exchange of stock to the extent the Distribution exceeds both E&P and Holdings' adjusted tax basis. Based on available financial data and Nexford's demonstrated history of profitability since the 2019 acquisition, it is likely that Nexford's accumulated E&P (inclusive of the ratable allocation of 2025 current E&P) will be sufficient to characterize a substantial portion, and likely all, of the approximately $335,000,000 Distribution as a taxable dividend. However, this conclusion is preliminary and must be confirmed through the E&P diligence described below.

2. Pass-Through Treatment at the Holdings Level. Holdings is classified as a partnership for federal income tax purposes under the default classification rules of Treasury Regulation § 301.7701-3. As a pass-through entity, Holdings does not itself pay federal income tax on the Distribution. Rather, the tax consequences of the Distribution — whether characterized as dividend income, return of capital, or gain — flow through Holdings to Fund IV and the Co-Invest Vehicle, and from those entities further to their respective limited partners and general partners. The character of the income is preserved as it passes through each partnership tier under IRC § 702(b).

3. State and Local Tax Implications. State and local tax consequences are relevant primarily in Illinois, where Nexford is headquartered and maintains its principal state tax domicile, and in Delaware, where multiple entities in the organizational chain are formed. The Distribution itself does not create a direct state tax liability at the Nexford level (because dividends paid are not deductible by the distributing corporation), but the characterization of the Distribution as dividend income at the Holdings and fund level may have state tax implications for partners who are subject to Illinois income tax or who have nexus with other states in which Nexford operates.

4. No Material Withholding Tax Obligation. No federal withholding tax is expected at the Nexford-to-Holdings level, provided that Holdings furnishes a valid IRS Form W-9 reflecting its taxpayer identification number (EIN 85-3291047). The Foreign Account Tax Compliance Act ("FATCA") provisions of IRC §§ 1471–1474 do not impose withholding obligations on distributions between domestic entities.

5. Planning Considerations and Recommended Diligence. This memorandum identifies several critical factual assumptions that must be confirmed before the analysis can be finalized, including Nexford's accumulated and current E&P, Holdings' adjusted tax basis in its Nexford stock, the absence of any entity classification election (Form 8832) for Holdings, the structure of the January 2019 acquisition (and in particular whether any election under IRC § 338 was made), and the tax characterization of the 2021 dividend recapitalization. We recommend that these items be confirmed with Nexford's CFO, Michelle Kaplan, and VP Treasury, Priya Mehta, with Nexford's independent auditor, Ashworth & Kendrick LLP (Helen Yamamoto, Engagement Partner), and with the Sponsor's outside counsel, Kellner Brandt & Associates LLP (Patricia Voss).

II. TRANSACTION STRUCTURE AND PARTIES

A. Overview of the Distribution Chain

The Distribution will occur through a multi-step chain, flowing from Nexford through Holdings to the fund-level entities, as described below.

Step 1: Distribution from Nexford to Holdings. Nexford Industrial Holdings Inc. (a Delaware corporation, EIN 36-4178552, headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173) will declare and pay a cash dividend of approximately $335,000,000 to its sole shareholder, Granite Peak NIH Holdings, LLC. The dividend will be authorized by Nexford's board of directors (or by written consent of its sole shareholder, Holdings, as may be required under Nexford's certificate of incorporation and bylaws, and subject to the applicable provisions of the Delaware General Corporation Law). The cash to fund the Distribution will be derived from the proceeds of the Term Loan B, which will be deposited into Nexford's operating accounts maintained at Crescent Harbor Bank, N.A. upon the closing of the refinancing. We expect the dividend to be declared and paid on the closing date, currently anticipated to be March 28, 2025.

Step 2: Distribution from Holdings to its Members. Granite Peak NIH Holdings, LLC (a Delaware limited liability company, EIN 85-3291047, registered office at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801) will distribute the cash received from Nexford to its two members in accordance with their respective membership interests and the distribution provisions of the Holdings LLC Agreement. Fund IV holds a 92% membership interest and will receive approximately $308,200,000. The Co-Invest Vehicle holds an 8% membership interest and will receive approximately $26,800,000.

Step 3: Further Distribution to Fund-Level Limited Partners. Fund IV and the Co-Invest Vehicle will receive their allocable shares of the Distribution proceeds. Each entity will in turn distribute or allocate such proceeds to their respective limited partners and general partners in accordance with the terms of their partnership agreements. The timing and mechanics of these downstream distributions are governed by the respective partnership agreements of Fund IV and the Co-Invest Vehicle and are beyond the scope of this memorandum, except to the extent that the tax characterization of the Distribution at each level is relevant.

The net effect of these steps is that the approximately $335,000,000 in cash dividend proceeds will flow from Nexford's balance sheet, through Holdings, and ultimately to the limited partners and general partners of Fund IV and the Co-Invest Vehicle, which include individual investors, pension funds, endowments, insurance companies, and other institutional and individual investors. The identity and tax status of these ultimate investors are relevant to the tax analysis and are discussed further below.

B. Entity Classification and Tax Status

An accurate understanding of the federal income tax classification of each entity in the organizational chain is essential to the analysis of the Distribution's tax consequences. The following sets forth the classification of each relevant entity:

Nexford Industrial Holdings Inc. Nexford is a corporation organized under the laws of the State of Delaware. As a corporation formed under state law, Nexford is automatically classified as a corporation for federal income tax purposes under Treasury Regulation § 301.7701-2(b)(1) (entities formed under a statute that refers to the entity as a corporation are treated as corporations per se). Nexford is taxable as a C corporation within the meaning of IRC § 1361(a)(2) and is subject to federal corporate income tax under IRC § 11 at the current rate of 21%. Nexford's fiscal year ends on December 31, and its state of tax residence for state income tax purposes is Illinois, where its corporate headquarters and principal place of business are located.

Granite Peak NIH Holdings, LLC. Holdings is a limited liability company organized under the laws of the State of Delaware. Under the entity classification regulations set forth in Treasury Regulation § 301.7701-3, a domestic eligible entity with two or more members is classified as a partnership for federal income tax purposes by default, unless the entity elects to be classified as a corporation by filing an IRS Form 8832 (Entity Classification Election). We assume for purposes of this memorandum that no such election has been filed and that Holdings is therefore treated as a partnership for federal income tax purposes. This assumption is critical to the analysis and must be confirmed. We recommend that Claudia Merritt or Marcus Leung confirm with Kellner Brandt & Associates LLP (Patricia Voss, Sponsor's Counsel) and with the Granite Peak deal team (Ryan Ostrowski) that (a) no entity classification election has ever been filed for Holdings on Form 8832, and (b) Holdings has consistently been treated as a partnership on all federal and state income tax returns since its formation.

Granite Peak Capital Fund IV, LP. Fund IV is a limited partnership organized under the laws of the State of Delaware. As a limited partnership with two or more partners, Fund IV is classified as a partnership for federal income tax purposes under the default rules of Treasury Regulation § 301.7701-3. The general partner of Fund IV is Granite Peak Capital GP IV, LLC, a Delaware limited liability company. Fund IV files IRS Form 1065 (U.S. Return of Partnership Income) and issues Schedule K-1s to its partners.

GP Fund IV Co-Invest, LP. The Co-Invest Vehicle is a Delaware limited partnership that is classified as a partnership for federal income tax purposes under the same default classification rules applicable to Fund IV.

Granite Peak Capital Partners, LP. The Sponsor is a Delaware limited partnership and the management company and sponsor of Fund IV and the Co-Invest Vehicle. Its managing partners are Derek Calloway and Vanessa Liu. The Sponsor's role in the transaction is limited to its position as the ultimate decision-maker with respect to the Fund's investment in Nexford; it is not a direct recipient of the Distribution.

It is important to note that because Holdings, Fund IV, and the Co-Invest Vehicle are all treated as partnerships (pass-through entities) for federal income tax purposes, the tax consequences of the Distribution ultimately rest with the individual limited partners and institutional investors in Fund IV and the Co-Invest Vehicle. These investors include taxable individuals, tax-exempt entities (pension funds, endowments, charitable foundations), insurance companies, and potentially non-U.S. persons, each of which may face different tax consequences depending on their individual circumstances.

C. Source of Funds

The Distribution is funded entirely from the proceeds of the $1,400,000,000 Term Loan B. The key terms of the Term Loan B are as follows:

• Borrower: Nexford Industrial Holdings Inc.

• Administrative Agent: Crescent Harbor Bank, N.A.

• Facility Type: Senior secured term loan B

• Principal Amount: $1,400,000,000

• Interest Rate: Adjusted Term SOFR + 400 basis points per annum, subject to a SOFR floor of 0.75%

• Maturity: March 28, 2032 (seven years from closing)

• Amortization: 1.00% per annum (quarterly payments of 0.25%)

• Collateral: First priority lien on substantially all assets of Nexford and its domestic subsidiaries

The use of proceeds for the Term Loan B is reconciled as follows:

The prior capital structure being refinanced consisted of an $875,000,000 first lien term loan (maturing June 2026, with $879,375,000 outstanding inclusive of accrued interest and fees) and a $190,000,000 revolving credit facility (maturing June 2025, currently undrawn), each governed by the Credit Agreement dated June 14, 2019, as entered into by and among Nexford, Atlas Meridian Bank, N.A., as administrative agent, and the lenders party thereto, as amended through the Fourth Amendment dated September 12, 2024 (the "Existing Credit Agreement"). The $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (issued under the Indenture dated November 8, 2021, with Pinnacle Trust Company, as trustee) remains outstanding and is not being refinanced as part of the current transaction.

D. Historical Context

The historical context of Granite Peak's investment in Nexford is relevant to the tax analysis, particularly with respect to Holdings' adjusted tax basis in its Nexford stock and the accumulated E&P of Nexford.

Granite Peak acquired Nexford in January 2019 for an enterprise value of approximately $1,650,000,000. Granite Peak's equity investment (contributed through Holdings) was approximately $725,000,000, with the balance of the acquisition price funded through the Existing Credit Agreement. At the time of the acquisition, Nexford was a diversified industrial manufacturing company with operations in advanced components, specialty coatings, precision machining, and engineered products for the aerospace, defense, automotive, and general industrial end markets.

Since the 2019 acquisition, Nexford has pursued an active bolt-on acquisition strategy, completing four acquisitions that have expanded its product offerings, geographic footprint, and customer base:

• Clearfield Tool & Die, Inc. — Acquired in 2021, a precision tooling and die manufacturing company based in Michigan.

• Summit Industrial Fabrication Co. — Acquired in 2022, a structural steel and industrial fabrication company based in South Carolina.

• Ridgepoint Specialty Coatings, LLC — Acquired in 2023, a specialty industrial coatings and surface treatment company based in Pennsylvania.

• Lakeshore Precision Engineering, Inc. — Acquired in 2024, a precision engineering and CNC machining company based in Michigan.

Each of these acquisitions generated asset basis step-ups, depreciation deductions, and potentially goodwill amortization under IRC § 197 (depending on the structure of each acquisition), all of which affect Nexford's E&P computation.

In November 2021, Nexford undertook its first dividend recapitalization, distributing $275,000,000 to Holdings (and thence to Fund IV and the Co-Invest Vehicle). That distribution was funded in part from the proceeds of the $250,000,000 Senior Unsecured Notes issuance. The tax characterization of the 2021 distribution — specifically, the extent to which it was treated as a dividend (to the extent of E&P) versus a return of capital (to the extent of Holdings' basis in Nexford stock) — is directly relevant to the current analysis, because any portion of the 2021 distribution that was characterized as a dividend would have reduced Nexford's accumulated E&P, and any portion characterized as a return of capital would have reduced Holdings' adjusted tax basis in its Nexford stock. We recommend obtaining the E&P analysis and tax characterization of the 2021 distribution from Ashworth & Kendrick LLP or from Granite Peak's tax advisors.

Following the proposed Distribution, cumulative distributions to Granite Peak and its co-investors will total approximately $610,000,000 ($275,000,000 from the 2021 recapitalization plus $335,000,000 from the proposed recapitalization). This represents approximately 84% of Granite Peak's original equity investment of $725,000,000.

III. FEDERAL INCOME TAX ANALYSIS

A. Characterization of the Distribution from Nexford to Holdings

1. General Framework under IRC Section 301

Nexford is a C corporation for federal income tax purposes, and the Distribution is a distribution of cash (property within the meaning of IRC § 317(a)) by Nexford to its sole shareholder, Holdings. Accordingly, the Distribution is governed by the provisions of IRC § 301, which provides the general framework for the tax treatment of distributions by corporations to shareholders with respect to their stock.

Under IRC § 301(c), the amount of a corporate distribution is characterized — and taxed — in the following descending priority:

(a) Dividend (IRC § 301(c)(1)). The portion of the distribution that constitutes a dividend, as defined in IRC § 316, is included in the gross income of the shareholder. Under IRC § 316(a), a dividend is any distribution of property made by a corporation to its shareholders out of (i) its earnings and profits accumulated after February 28, 1913, or (ii) its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made. The dividend portion is treated as ordinary income, subject to potential qualification for preferential tax rates (discussed in subsection 3 below).

(b) Return of Capital (IRC § 301(c)(2)). The portion of the distribution that is not a dividend (because it exceeds E&P) is applied against and reduces the shareholder's adjusted basis in its stock. This portion is not included in the shareholder's gross income and is, in effect, a tax-free recovery of the shareholder's investment. However, basis cannot be reduced below zero.

(c) Gain from Sale or Exchange (IRC § 301(c)(3)). The portion of the distribution that exceeds both E&P and the shareholder's adjusted basis in its stock is treated as gain from the sale or exchange of property. This gain will generally be capital gain (long-term if the stock has been held for more than one year), and will be taxed at the applicable capital gains rate.

The characterization waterfall under IRC § 301(c) must be applied in the order specified above. Thus, the critical threshold determinations are (i) the amount of Nexford's available E&P (both accumulated and current) at the time of the Distribution, and (ii) Holdings' adjusted tax basis in its Nexford stock immediately prior to the Distribution.

2. Earnings and Profits Analysis

Importance of the E&P Determination. The E&P analysis is the single most important factual determination for purposes of characterizing the Distribution. If Nexford's combined accumulated and current E&P equals or exceeds $335,000,000 at the time of the Distribution, the entire Distribution will be characterized as a taxable dividend. If E&P is less than $335,000,000, the shortfall will be characterized as a return of capital (and potentially as gain), which has different — and potentially more favorable — tax consequences for certain categories of investors.

E&P is a tax concept that differs from retained earnings as reported for financial accounting (GAAP) purposes. E&P generally reflects a corporation's economic ability to pay dividends, computed using tax accounting methods but with numerous adjustments that cause it to diverge from both taxable income and book income. Among the significant differences: E&P includes tax-exempt income, is reduced by federal income taxes paid (but not by state income taxes in certain computations), uses a specific depreciation methodology (generally the Alternative Depreciation System under IRC § 168(g)), and requires capitalization and amortization of certain expenditures that may be currently deductible for taxable income purposes.

Accumulated E&P. Nexford's accumulated E&P must be calculated from the date of the January 2019 acquisition (or, more precisely, from the beginning of Nexford's existence as a corporation, including any pre-acquisition accumulated E&P that carries over to the new ownership period) through the date immediately preceding the Distribution. Upon Granite Peak's acquisition of Nexford in January 2019, Nexford's historical accumulated E&P would have been determined at that point, and any pre-acquisition E&P would carry over to the post-acquisition period under general principles. See IRC § 381 (carryover of earnings and profits in certain corporate acquisitions); however, if the acquisition was structured as a stock purchase without a § 338 election, Nexford's pre-acquisition E&P would remain intact.

Since the January 2019 acquisition, Nexford has accumulated additional E&P based on its operating results, adjusted for the differences between taxable income and E&P. This accumulated E&P must also be reduced by the 2021 dividend recapitalization of $275,000,000 to the extent that distribution was characterized as a dividend (i.e., paid out of E&P). If the entire 2021 distribution was treated as a dividend, accumulated E&P as of the date of that distribution was reduced by $275,000,000.

We recommend obtaining from Ashworth & Kendrick LLP (Helen Yamamoto, Engagement Partner) or from Nexford's CFO, Michelle Kaplan, Nexford's E&P schedules as of December 31, 2024, together with a pro forma computation of E&P through the anticipated Distribution date of March 28, 2025. If these schedules are not currently maintained in a format suitable for tax analysis, we can assist in preparing the E&P computation based on Nexford's tax returns and financial statements.

Current E&P for 2025. Under IRC § 316(a)(2), a distribution is treated as a dividend to the extent of the corporation's current-year E&P, computed as of the close of the taxable year, regardless of the amount of E&P at the time the distribution is actually made. This is significant because it means that even if Nexford's accumulated E&P (as of January 1, 2025) is insufficient to cover the $335,000,000 Distribution, Nexford's current E&P for the entire 2025 taxable year is taken into account.

Moreover, when a corporation makes a single distribution during the taxable year, the full year's current E&P is available to support dividend characterization. If a corporation makes multiple distributions during the taxable year, current E&P is allocated ratably among the distributions on a pro rata basis based on the relative size of each distribution. See Treasury Regulation § 1.316-2(b). An early-year distribution (such as the proposed March 28, 2025 Distribution) thus benefits from the availability of the full year's current E&P.

Key Financial Metrics Relevant to E&P Estimation. The following financial data points, derived from the Confidential Information Memorandum and management presentations provided in connection with the refinancing, are relevant to a preliminary estimation of Nexford's E&P:

• LTM Revenue (as of December 31, 2024): $2,100,000,000

• LTM Reported EBITDA: $357,000,000

• LTM Adjusted EBITDA (inclusive of $28,000,000 in add-backs): $385,000,000

• EBITDA Add-Backs ($28,000,000 in aggregate):

• Acquisition-related costs: $12,000,000

• Non-recurring restructuring charges: $8,500,000

• Sponsor management fees: $4,500,000

• Integration costs: $3,000,000

• Capital Expenditures: Approximately $78,000,000 per year

• Pro Forma Cash Interest Expense (Year 1): Approximately $117,708,500 (estimated all-in rate of approximately 8.45% on the Term Loan B)

• Existing Notes Interest Expense: Approximately $18,125,000 per year (7.250% × $250,000,000)

It is important to emphasize that EBITDA (and Adjusted EBITDA) is not a substitute for E&P. EBITDA is an earnings metric that excludes interest, taxes, depreciation, and amortization, whereas E&P is computed using specific tax accounting rules that diverge significantly from GAAP and from the Adjusted EBITDA concept used in leveraged finance. Not all EBITDA add-backs correspond to E&P adjustments. For example, non-recurring restructuring charges may be deductible for both taxable income and E&P purposes, in which case the add-back would not affect E&P. Similarly, sponsor management fees may or may not be deductible depending on their characterization for tax purposes. E&P must be computed independently using Nexford's federal income tax return data (IRS Form 1120) as a starting point, with the specific adjustments required by Treasury Regulation § 1.312-6 and related provisions.

Furthermore, Nexford's four bolt-on acquisitions (Clearfield Tool & Die, Inc. in 2021, Summit Industrial Fabrication Co. in 2022, Ridgepoint Specialty Coatings, LLC in 2023, and Lakeshore Precision Engineering, Inc. in 2024) would have generated stepped-up asset bases, additional depreciation deductions (computed using the E&P depreciation method under IRC § 312(k)), and potentially IRC § 197 amortization of goodwill and other intangibles. The net effect of these acquisitions on E&P depends on the structure of each acquisition (stock versus asset purchase), the allocation of purchase price among acquired assets, and the depreciation and amortization schedules applicable to the acquired assets for E&P purposes.

Preliminary Assessment. Based on the available financial data — in particular, the reported LTM EBITDA of $357,000,000 and the history of consistent profitability since the 2019 acquisition — it is our preliminary assessment that Nexford's accumulated E&P (inclusive of the ratable allocation of 2025 current E&P) will likely be sufficient to characterize a substantial portion, and quite possibly all, of the approximately $335,000,000 Distribution as a taxable dividend. This assessment is based on the following reasoning:

Nexford has reported EBITDA in excess of $300,000,000 in each of the last several fiscal years. Even after accounting for (i) interest expense (which was lower under the prior credit facility than it will be post-refinancing), (ii) depreciation and amortization (computed for E&P purposes), (iii) federal and state income taxes paid, (iv) capital expenditures (to the extent they generate E&P depreciation), and (v) the $275,000,000 reduction in accumulated E&P from the 2021 dividend recapitalization, cumulative E&P over the period from January 2019 through March 2025 — a period of approximately six years and three months — would be expected to substantially exceed the $335,000,000 Distribution. By way of rough illustration, if Nexford's annual taxable income (before interest expense and tax) has averaged even $200,000,000 per year, cumulative taxable income over six-plus years would exceed $1,200,000,000 before interest and taxes. After deducting interest expense (averaging perhaps $60,000,000 to $75,000,000 per year under the prior credit facility), federal income taxes (at 21%), and state income taxes (at approximately 5%-9%), cumulative after-tax income would likely be in the range of $500,000,000 to $700,000,000. After reducing for the 2021 dividend of $275,000,000 and making the various E&P adjustments, remaining accumulated E&P is likely to be substantial — though the precise amount cannot be determined without access to Nexford's tax returns and E&P schedules.

However, this is a preliminary and illustrative analysis only, and we emphasize that the E&P computation is inherently complex and fact-intensive. E&P is reduced not only by federal and state income taxes paid, but also by non-deductible expenses, certain penalties, and the excess of E&P depreciation over tax depreciation. The four bolt-on acquisitions may have generated significant additional depreciation deductions for E&P purposes that would reduce E&P below what a simple back-of-the-envelope calculation might suggest. Additionally, the 2021 distribution's characterization (i.e., the extent to which it was treated as a dividend versus a return of capital) directly affects the accumulated E&P available for the proposed Distribution.

Action Item: We strongly recommend that the Banking & Finance team request, as soon as practicable, Nexford's accumulated E&P schedule as of December 31, 2024, and a projected computation of 2025 current E&P through the Distribution date, from Ashworth & Kendrick LLP (Helen Yamamoto) or from Nexford's finance team (Michelle Kaplan, CFO, and Priya Mehta, VP Treasury). If accumulated plus current E&P equals or exceeds $335,000,000, the entire Distribution will be treated as a dividend. If E&P is less than $335,000,000, the excess will be treated as a return of capital or gain, as described in subsections 4 and 5 below.

3. Dividend Treatment Consequences

To the extent the Distribution (or any portion thereof) is characterized as a dividend under IRC § 316, the following tax consequences result:

At the Holdings Level. The dividend income is includable in Holdings' gross income. However, because Holdings is classified as a partnership for federal income tax purposes, it is not itself subject to federal income tax. Rather, the dividend income passes through to Holdings' members — Fund IV (92%) and the Co-Invest Vehicle (8%) — in accordance with the allocation provisions of the Holdings LLC Agreement. Each member's distributive share of the dividend income is reported on the Schedule K-1 issued by Holdings and is included in the member's gross income.

Dividends Received Deduction (DRD). If any partner of Holdings (or of Fund IV or the Co-Invest Vehicle) is itself a C corporation, such partner may be entitled to a dividends received deduction under IRC §§ 243 through 246A. The DRD is intended to mitigate the triple-taxation that would otherwise result when dividend income flows from a C corporation (Nexford), through one or more tiers of entities, to a corporate investor. The amount of the DRD depends on the percentage of the distributing corporation's stock owned by the recipient corporation: 50% for ownership of less than 20%, 65% for ownership of 20% or more but less than 80%, and 100% for ownership of 80% or more (subject to the limitations of IRC § 246A for debt-financed portfolio stock).

In the case of a dividend received by a partnership, the DRD is determined at the partner level, not the partnership level. See IRC § 702(a)(5) (dividends with respect to which the DRD is allowable are separately stated items of the partnership); Treasury Regulation § 1.702-1(a)(4). Each partner that is a C corporation computes its DRD based on its own circumstances, including its indirect ownership percentage in Nexford (determined by looking through the partnership). Because Holdings owns 100% of Nexford's stock, a corporate partner's indirect ownership percentage will depend on its interest in Holdings (through Fund IV or the Co-Invest Vehicle). This analysis is complex and fact-specific, and the availability and amount of the DRD must be determined separately for each corporate partner. We note that the majority of limited partners in Fund IV are likely institutional investors (pension funds, endowments, insurance companies) rather than C corporations, but this should be confirmed with the Granite Peak deal team.

Qualified Dividend Income for Individual Partners. For partners who are individuals (including, potentially, the managing partners of the Sponsor, Derek Calloway and Vanessa Liu, and any individual limited partners of Fund IV or the Co-Invest Vehicle), dividend income from a domestic C corporation may qualify for the preferential tax rates applicable to "qualified dividend income" under IRC § 1(h)(11). Qualified dividends are currently taxed at a maximum federal rate of 20% (plus the 3.8% net investment income tax ("NIIT") under IRC § 1411, for a combined maximum rate of 23.8%), rather than at the ordinary income rates that would otherwise apply (maximum 37% plus 3.8% NIIT = 40.8%).

To qualify for the preferential rate, the dividend must be paid by a domestic corporation (Nexford is a domestic corporation) and the shareholder must satisfy a holding period requirement: the shareholder must have held the stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. See IRC § 1(h)(11)(B)(iii); IRC § 246(c). This holding period requirement applies at the entity level most directly holding the stock — here, Holdings. Holdings has held Nexford stock continuously since January 2019, which is well in excess of the 60-day holding period requirement. Accordingly, we expect the qualified dividend income requirements to be satisfied, and the dividend income flowing through to individual partners should be eligible for the preferential 20% rate (plus NIIT) rather than ordinary income rates.

The difference in effective tax rates is significant. For an individual limited partner in the highest marginal bracket, the effective federal rate on qualified dividend income is 23.8%, compared to 40.8% on ordinary income. On a $335,000,000 distribution, the aggregate federal tax differential across all individual investors could be substantial, though the precise amount depends on the individual circumstances of each investor.

4. Return of Capital Treatment

To the extent the Distribution exceeds Nexford's accumulated and current E&P (if E&P is insufficient to cover the entire $335,000,000 Distribution), the excess is applied against and reduces Holdings' adjusted tax basis in its Nexford stock under IRC § 301(c)(2). This portion of the Distribution is not included in Holdings' gross income and is not subject to federal income tax. It is, in effect, a tax-free recovery of Holdings' invested capital.

Holdings' Tax Basis in Nexford Stock. Holdings' adjusted tax basis in its Nexford stock was initially established at the time of the January 2019 acquisition. The initial basis would have been the cost of the stock — generally the purchase price paid by Holdings for the Nexford shares. Granite Peak's equity investment (contributed through Holdings) was approximately $725,000,000, though Holdings' tax basis may differ from this amount depending on the precise acquisition structure.

If the January 2019 acquisition was structured as a stock purchase (without any IRC § 338 election), Holdings' tax basis in its Nexford stock would generally be equal to the purchase price paid for the stock (approximately $725,000,000 in equity, which represents the total enterprise value of $1,650,000,000 less the acquisition debt). This basis could subsequently have been adjusted for prior return-of-capital distributions, if any.

If, alternatively, an election under IRC § 338(h)(10) was made in connection with the acquisition (treating the stock purchase as a deemed asset acquisition for tax purposes), the tax consequences would differ significantly. A § 338(h)(10) election would have resulted in a step-up in the tax basis of Nexford's underlying assets to fair market value, with corresponding changes to the depreciation and amortization schedules. In such case, Holdings' tax basis in its Nexford stock would be determined under the "new target" rules of Treasury Regulation § 1.338-5, and could differ substantially from the purchase price paid. Moreover, a § 338(h)(10) election would have affected Nexford's accumulated E&P (the old target's E&P would be eliminated, and the new target would start with zero E&P on the day after the acquisition date). This would have a significant impact on the E&P analysis and the characterization of the Distribution.

Impact of the 2021 Distribution on Holdings' Tax Basis. If any portion of the 2021 dividend recapitalization ($275,000,000) was treated as a return of capital (i.e., exceeded E&P at the time of that distribution), Holdings' adjusted tax basis in its Nexford stock would have been reduced by such amount. This would reduce the basis cushion available to absorb any return-of-capital portion of the current Distribution.

Action Item: We recommend confirming Holdings' current adjusted tax basis in its Nexford stock as of the date immediately prior to the Distribution. This information should be available from Kellner Brandt & Associates LLP (Patricia Voss) or from the Granite Peak tax team.

5. Gain Recognition

To the extent the Distribution exceeds both Nexford's E&P and Holdings' adjusted tax basis in its Nexford stock, the excess is treated as gain from the sale or exchange of property — specifically, as gain from the deemed sale of Holdings' Nexford stock — under IRC § 301(c)(3). Because Holdings has held Nexford stock continuously since January 2019 (more than one year), any gain recognized under this provision would be long-term capital gain.

Because Holdings is a partnership for federal income tax purposes, any such gain would be allocated among its members in accordance with the Holdings LLC Agreement and would retain its character as long-term capital gain as it flows through to Fund IV (92%) and the Co-Invest Vehicle (8%), and further to their respective limited partners. The tax rate applicable to such gain depends on the identity and tax status of each ultimate partner:

• Individual partners: Subject to a maximum federal long-term capital gains rate of 20%, plus the 3.8% NIIT, for a combined maximum rate of 23.8%.

• Corporate partners: Subject to the federal corporate income tax rate of 21% (capital gains of corporations are taxed at the same rate as ordinary income).

• Tax-exempt partners: Generally not subject to tax on long-term capital gain, unless the gain constitutes unrelated business taxable income ("UBTI") — which, as discussed in Section III.D below, is generally not expected to be the case here.

We consider it unlikely, based on our preliminary assessment of Nexford's E&P and Holdings' basis, that any portion of the Distribution will be characterized as gain under IRC § 301(c)(3). However, this conclusion is contingent on the E&P and basis diligence described above.

B. Tax Consequences at the Holdings (Partnership) Level

1. Pass-Through Treatment

As noted above, Granite Peak NIH Holdings, LLC is classified as a partnership for federal income tax purposes. As such, Holdings is not subject to entity-level federal income tax. Rather, all items of income, gain, loss, deduction, and credit flow through to Holdings' members — Fund IV and the Co-Invest Vehicle — in accordance with the allocation provisions of the Holdings LLC Agreement and the applicable provisions of Subchapter K (IRC §§ 701–777).

Holdings must file an annual IRS Form 1065 (U.S. Return of Partnership Income) and must issue Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) to each of its members. The Distribution received from Nexford will be reflected on Holdings' Form 1065 in accordance with its tax characterization (dividend income, return of capital, or gain, as determined under the IRC § 301(c) waterfall), and each member's allocable share will be reported on its Schedule K-1.

The allocation of the Distribution's tax consequences between Fund IV (92%) and the Co-Invest Vehicle (8%) will be governed by the allocation provisions of the Holdings LLC Agreement. Under the general rules of IRC § 704(b), allocations set forth in the partnership agreement will be respected for tax purposes if they have "substantial economic effect." We recommend that the Banking & Finance team obtain and review the Holdings LLC Agreement — specifically, the provisions governing allocations, distributions, capital accounts, and distribution waterfalls — to confirm that the allocations of the Distribution will be respected under the substantial economic effect safe harbor of Treasury Regulation § 1.704-1(b)(2). Kellner Brandt & Associates LLP (Patricia Voss) should be able to provide the current version of the Holdings LLC Agreement.

2. Adjustments to Members' Capital Accounts and Outside Basis

The cash distribution from Holdings to its members (Fund IV and the Co-Invest Vehicle) will reduce each member's capital account and "outside" basis in its Holdings interest. Under IRC § 733, a partner's basis in its partnership interest is reduced (but not below zero) by the amount of money distributed to the partner.

If the cash distribution to a member exceeds that member's adjusted basis in its partnership interest (its "outside basis"), the excess is treated as gain from the sale or exchange of the partnership interest under IRC § 731(a)(1). Such gain would generally be capital gain and, given that Fund IV and the Co-Invest Vehicle have each held their interests in Holdings since January 2019, would likely be long-term capital gain.

It is important to assess whether the cumulative distributions from Holdings to Fund IV and the Co-Invest Vehicle have exceeded (or will exceed) these members' outside bases. The relevant data points are as follows:

• Granite Peak's original equity investment (through Holdings): approximately $725,000,000

• Prior distribution from Holdings to members (2021): $275,000,000

• Proposed Distribution from Holdings to members: $335,000,000

• Cumulative distributions: $610,000,000

At first glance, the cumulative distributions of $610,000,000 are less than the original equity investment of $725,000,000, suggesting that outside basis should remain positive. However, outside basis is not static — it is adjusted annually to reflect the member's distributive share of partnership income, gain, loss, and deductions under IRC § 705(a). If Holdings has allocated income to its members in each year since 2019 (as would be expected given Nexford's profitability), the members' outside bases would have been increased by the cumulative allocated income and decreased by the cumulative distributions. Conversely, if Holdings has allocated losses or deductions, outside basis could be lower than the original contribution.

Given the complexity of this computation, which depends on six years of partnership-level allocations, we recommend confirming each member's outside basis in its Holdings interest with the Sponsor's tax advisors (Kellner Brandt & Associates LLP or the Granite Peak tax team).

C. Tax Consequences at the Fund IV and Co-Invest Vehicle Level

Both Fund IV and the Co-Invest Vehicle are Delaware limited partnerships that are treated as partnerships for federal income tax purposes. Accordingly, the same pass-through principles described above with respect to Holdings apply at the fund level: income, gain, loss, deduction, and credit items flow through from Holdings to Fund IV and the Co-Invest Vehicle, and from those entities further to their respective limited partners and general partner.

The character of the income — whether ordinary dividend income, return of capital, or capital gain — is preserved as it flows through each partnership tier. IRC § 702(b) provides that the character of any item of income, gain, loss, deduction, or credit included in a partner's distributive share shall be determined as if such item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership. This means that dividend income from Nexford retains its character as dividend income when it flows through Holdings to Fund IV and the Co-Invest Vehicle, and from those entities to their respective partners. Similarly, if any portion of the Distribution is characterized as long-term capital gain, it retains that character through each tier.

Each of Fund IV and the Co-Invest Vehicle must file IRS Form 1065 and issue Schedule K-1s to their respective partners reflecting the character of the income allocable to each partner. The allocation of income among partners at the fund level will be governed by the respective partnership agreements, including any provisions for preferred returns, carried interest, management fee offsets, and distribution waterfalls. These provisions may result in allocations that differ from the simple pro rata allocation suggested by membership percentages, and may have implications for the timing and character of income allocated to the general partner (carried interest) versus the limited partners.

D. Unrelated Business Taxable Income (UBTI) Considerations

Certain limited partners of Fund IV (and potentially of the Co-Invest Vehicle) may be tax-exempt entities, including qualified pension and profit-sharing plans under IRC § 401(a), individual retirement accounts under IRC § 408, state and local government pension plans, charitable organizations described in IRC § 501(c)(3), university endowments, and similar tax-exempt investors. These entities are generally exempt from federal income tax on investment income, but are subject to tax on "unrelated business taxable income" under IRC §§ 511–514.

Dividend Income and UBTI. Dividend income is generally not UBTI. Under IRC § 512(b)(1), dividends are excluded from the computation of UBTI. Accordingly, to the extent the Distribution is characterized as a dividend, it should not constitute UBTI for tax-exempt partners, and such partners should not be subject to federal income tax on their allocable share of the dividend.

Debt-Financed Income Exception. An exception to this general exclusion exists for "debt-financed" income under IRC § 514. If a tax-exempt organization (or a partnership in which it is a partner) holds "debt-financed property," a proportionate share of the income from such property is treated as UBTI. The term "debt-financed property" generally means property held to produce income with respect to which there is "acquisition indebtedness."

In the present case, the $1,400,000,000 Term Loan B is incurred at the Nexford level — that is, by a C corporation. The debt is not incurred by Holdings, Fund IV, or the Co-Invest Vehicle. The Distribution to Holdings is a dividend from a C corporation, not income from a debt-financed investment held by the partnership. The leveraging occurs below the C corporation level, and the C corporation effectively serves as a "Blocker" that prevents the debt from creating UBTI at the partnership and tax-exempt investor level. This is one of the principal tax planning advantages of the structure, in which the portfolio company is a C corporation (rather than a pass-through entity) and the debt is incurred at the C corporation level.

Accordingly, the debt-financed property rules of IRC § 514 should not create UBTI at the tax-exempt partner level with respect to the Distribution. Similarly, if any portion of the Distribution is characterized as return of capital or gain (rather than dividend), the same analysis applies — gain on the sale of stock by a tax-exempt entity is generally not UBTI unless the stock itself is debt-financed property, which it should not be in this structure.

Recommendation. We recommend confirming with the Granite Peak deal team that no tax-exempt investors have raised specific UBTI concerns in connection with the proposed Distribution. To the extent any tax-exempt limited partners have specific UBTI concerns or have requested tax opinions or representations, those matters should be addressed separately.

E. Withholding Tax Considerations at the Nexford-to-Holdings Level

Because Holdings is a domestic entity (a Delaware limited liability company organized under the laws of the State of Delaware), and assuming Holdings furnishes a valid IRS Form W-9 (Request for Taxpayer Identification Number and Certification) reflecting its taxpayer identification number (EIN 85-3291047), no federal withholding tax is required on the Distribution from Nexford to Holdings.

IRC § 1441 imposes a 30% withholding tax on certain payments of U.S.-source income (including dividends) to nonresident alien individuals. IRC § 1442 imposes a similar withholding obligation on payments to foreign corporations. Neither provision applies to payments to domestic entities. Holdings, as a domestic limited liability company classified as a partnership, is not a foreign person, and the withholding provisions of IRC §§ 1441 and 1442 are inapplicable.

The Foreign Account Tax Compliance Act ("FATCA"), codified at IRC §§ 1471–1474, imposes a 30% withholding tax on certain "withholdable payments" made to "foreign financial institutions" and "non-financial foreign entities" that fail to comply with specified reporting and compliance requirements. FATCA does not impose withholding obligations on payments between domestic entities. Because both Nexford and Holdings are domestic entities, FATCA is not applicable to the Distribution.

We note that separate withholding tax considerations may arise in connection with interest payments on the Term Loan B to syndicate lenders, including any non-U.S. lenders in the syndication group. Those issues will be addressed in the separate Tax Memorandum — Withholding Tax Considerations for Lenders, which is currently being prepared and is expected to be completed by March 7, 2025.

F. IRC Section 163(j) Interaction

Although the deductibility of interest on the Term Loan B is not the primary focus of this memorandum and will be addressed in a separate Tax Memorandum — Deductibility of Interest on Term Loan B (Section 163(j) Analysis), expected by March 5, 2025, it is appropriate to note the interaction between the increased debt burden and the E&P analysis, as well as the broader tax posture of Nexford following the refinancing.

Under IRC § 163(j), the deductibility of "business interest expense" is limited to the sum of (i) business interest income, (ii) 30% of the taxpayer's "adjusted taxable income" ("ATI"), and (iii) floor plan financing interest (not applicable here). For taxable years beginning after December 31, 2021, ATI is computed without adding back depreciation, amortization, or depletion — effectively tightening the limitation relative to the pre-2022 rules that used an EBITDA-like proxy.

The increased debt from the $1,400,000,000 Term Loan B, combined with the $250,000,000 of outstanding Senior Unsecured Notes, will significantly increase Nexford's annual interest expense. Estimated pro forma annual interest expense is approximately as follows:

Using Nexford's LTM Adjusted EBITDA of $385,000,000 as a rough proxy for ATI (acknowledging that ATI is computed differently and does not include depreciation and amortization add-backs for tax years beginning after 2021), the 30% ATI limitation would allow deduction of approximately $115,500,000 per year. This suggests a potential annual disallowance of approximately $20,333,500 ($135,833,500 total interest expense minus $115,500,000 allowable deduction), resulting in a disallowed interest carryforward under IRC § 163(j)(2) that may be carried forward indefinitely and deducted in future taxable years to the extent the limitation permits.

The significance of the Section 163(j) limitation for purposes of the present memorandum is twofold:

First, disallowed interest expense under IRC § 163(j) nonetheless reduces E&P. Under Treasury Regulation § 1.312-6, E&P is reduced by all interest expense incurred by the corporation, regardless of whether such interest is currently deductible for taxable income purposes. Accordingly, the Section 163(j) limitation will create a divergence between taxable income and E&P: taxable income will be higher (because the disallowed interest is not deductible), while E&P will be lower (because the disallowed interest still reduces E&P). This means that in future years, Nexford's E&P will be reduced by the full amount of interest expense, even if a portion is not currently deductible for income tax purposes. Over time, this could reduce the E&P available to support future distributions.

Second, the disallowed interest carryforward will increase Nexford's deferred tax asset (for financial accounting purposes) and will reduce future taxable income if and when the carryforward is utilized.

A detailed analysis of these issues will be provided in the separate Section 163(j) memorandum.

G. Impact of the Distribution on Nexford's Tax Attributes

The Distribution of approximately $335,000,000 in cash from Nexford to Holdings does not directly affect Nexford's taxable income for federal or state income tax purposes. Dividends paid by a corporation to its shareholders are not deductible by the distributing corporation. See IRC § 311(a) (no gain or loss is recognized to a corporation on the distribution of property to its shareholders with respect to its stock, except as provided in IRC § 311(b), which applies only to distributions of appreciated property, not cash).

The Distribution does, however, affect the following tax attributes and financial metrics of Nexford:

• Accumulated E&P. Nexford's accumulated E&P is reduced by the amount of the Distribution that is characterized as a dividend. If the entire $335,000,000 Distribution is treated as a dividend, accumulated E&P is reduced by $335,000,000. This reduction may limit the ability to characterize future distributions as dividends and may affect the tax treatment of any subsequent distribution to Holdings.

• Balance Sheet Impact. The Distribution reduces Nexford's cash and total assets by $335,000,000. This does not directly affect Nexford's tax attributes (NOL carryforwards, credit carryforwards, Section 163(j) carryforwards, etc.) but does affect the company's liquidity, leverage ratios, and overall financial position.

• No IRC § 311(b) Gain. Because the Distribution is a cash distribution (not a distribution of appreciated property), no gain is recognized by Nexford under IRC § 311(b). If Nexford were distributing appreciated property (e.g., stock of a subsidiary or real property with a fair market value in excess of its adjusted tax basis), Nexford would recognize gain as if the property had been sold at fair market value. This issue does not arise here.

• No Impact on NOL Carryforwards. The Distribution does not reduce or affect any net operating loss ("NOL") carryforwards that Nexford may have. NOL carryforwards are a separate tax attribute that is not affected by the payment of dividends.

• No Impact on Other Tax Attributes. The Distribution does not affect Nexford's tax credit carryforwards, Section 163(j) disallowed interest carryforwards, or other tax attributes, except to the extent the reduction in E&P may indirectly affect the characterization of future distributions.

IV. STATE AND LOCAL TAX ANALYSIS

A. Illinois

Nexford's state of tax residence is Illinois, where it maintains its corporate headquarters at 1400 Industrial Parkway, Schaumburg, Illinois 60173, and files its state income tax returns. Nexford's fiscal year ends on December 31. The state tax implications of the Distribution are analyzed below.

Illinois Corporate Income Tax at the Nexford Level. Nexford is subject to the Illinois corporate income tax, which currently consists of two components: (i) a corporate income tax at a rate of 7.0%, and (ii) a personal property replacement tax applicable to corporations at a rate of 2.5%, for a combined effective rate of 9.5%. The Distribution itself does not create a new tax liability for Nexford in Illinois, because dividends paid by a corporation to its shareholders are not deductible for Illinois income tax purposes (consistent with the federal treatment). However, the E&P that funded (or will fund) the Distribution was previously subject to Illinois income tax to the extent that Nexford's Illinois-apportioned taxable income generated the E&P in prior years. In other words, the earnings from which the dividend is paid have already been taxed at the Illinois level.

It should be noted that Illinois uses a single sales factor apportionment formula for purposes of apportioning the taxable income of multistate corporations. Nexford's Illinois apportionment factor depends on the ratio of its Illinois sales to its total sales. Because Nexford's manufacturing operations span multiple states (Illinois, South Carolina, Texas, Michigan, Pennsylvania, and Canada), a significant portion of Nexford's taxable income may be apportioned away from Illinois and taxed in other states. The Illinois apportionment factor is relevant to the overall E&P computation (because state income taxes paid reduce E&P) and to the future state tax posture of Nexford following the refinancing.

Illinois Treatment of the Dividend at the Holdings Level. Holdings, as a pass-through entity for federal income tax purposes, is also generally treated

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 425 Lexington Avenue New York, New York 10017
February 28, 2025
INTERNAL TAX MEMORANDUM
CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared for the internal use of Calderwood & Harkness LLP and its client, Nexford Industrial Holdings Inc. This memorandum contains confidential legal analysis and advice and is not intended for distribution to any third party. Do not distribute, copy, or forward this memorandum or any portion thereof without the prior written authorization of the undersigned or the Responsible Partner identified above.
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I. EXECUTIVE SUMMARY
A. Purpose of Memorandum
This memorandum analyzes the federal and state income tax consequences of the proposed cash dividend distribution of approximately $335,000,000 (the "Distribution") from Nexford Industrial Holdings Inc., a Delaware corporation ("Nexford" or the "Borrower"), to its direct parent and sole shareholder, Granite Peak NIH Holdings, LLC, a Delaware limited liability company ("Holdings"). Following receipt of the Distribution, Holdings will further distribute the cash proceeds to its two members: Granite Peak Capital Fund IV, LP, a Delaware limited partnership ("Fund IV"), which holds a 92% membership interest in Holdings, and GP Fund IV Co-Invest, LP, a Delaware limited partnership (the "Co-Invest Vehicle"), which holds the remaining 8% membership interest in Holdings. Fund IV will receive approximately $308,200,000 of the Distribution, and the Co-Invest Vehicle will receive approximately $26,800,000, in each case subject to the allocation and distribution provisions of the Holdings LLC Agreement.
This memorandum is intended to provide the Banking & Finance team at Calderwood & Harkness LLP with a comprehensive overview of the principal federal and state tax issues arising in connection with the Distribution, to identify areas requiring further factual diligence, and to recommend specific action items necessary to finalize the tax analysis in advance of the anticipated closing date of March 28, 2025. This memorandum does not address the tax consequences of the refinancing itself (including the deductibility of interest on the new Term Loan B facility), the withholding tax obligations applicable to syndicate lenders, or the state and local tax implications associated with the grant of security interests and recording of mortgages on Nexford's real property assets; each of these topics will be addressed in separate memoranda currently in preparation, as described further in Section VII below.
B. Transaction Context
The Distribution is funded from the proceeds of a $1,400,000,000 senior secured term loan B facility (the "Term Loan B") being arranged by Crescent Harbor Bank, N.A., as administrative agent and lead arranger, pursuant to a Credit Agreement expected to be entered into on or about March 28, 2025 (the "New Credit Agreement"). The Term Loan B serves multiple purposes: it refinances existing first lien credit facilities with Atlas Meridian Bank, N.A. (payoff of the outstanding first lien term loan of approximately $879,375,000), funds transaction fees and expenses of approximately $38,625,000, deposits approximately $147,000,000 to Nexford's balance sheet for general corporate purposes, and funds the approximately $335,000,000 Distribution that is the subject of this memorandum.
The proposed transaction represents the second dividend recapitalization undertaken by Nexford since its acquisition by Granite Peak Capital Partners, LP ("Granite Peak" or the "Sponsor") in January 2019. The first dividend recapitalization, completed in November 2021, distributed $275,000,000 to Holdings, which was contemporaneous with the issuance of $250,000,000 in aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (the "Existing Notes") under an indenture with Pinnacle Trust Company, as trustee. The Existing Notes remain outstanding and are not being refinanced as part of the current transaction. Following the closing of the proposed transaction, cumulative distributions to Granite Peak and its co-investors through Holdings will total approximately $610,000,000.
C. Key Conclusions Preview
Based on the analysis set forth in this memorandum, subject to the assumptions and limitations described in Section VI, and pending completion of the outstanding diligence items identified herein, the principal tax conclusions are as follows:
1. Characterization of the Distribution from Nexford to Holdings. The Distribution from Nexford (a C corporation) to Holdings (its sole shareholder) will be characterized in accordance with the three-tier framework of Internal Revenue Code ("IRC" or "Code") Section 301(c): first, as a dividend to the extent of Nexford's accumulated and current earnings and profits ("E&P"); second, as a tax-free return of capital reducing Holdings' adjusted tax basis in its Nexford stock (but not below zero); and third, as gain from the sale or exchange of stock to the extent the Distribution exceeds both E&P and Holdings' adjusted tax basis. Based on available financial data and Nexford's demonstrated history of profitability since the 2019 acquisition, it is likely that Nexford's accumulated E&P (inclusive of the ratable allocation of 2025 current E&P) will be sufficient to characterize a substantial portion, and likely all, of the approximately $335,000,000 Distribution as a taxable dividend. However, this conclusion is preliminary and must be confirmed through the E&P diligence described below.
2. Pass-Through Treatment at the Holdings Level. Holdings is classified as a partnership for federal income tax purposes under the default classification rules of Treasury Regulation § 301.7701-3. As a pass-through entity, Holdings does not itself pay federal income tax on the Distribution. Rather, the tax consequences of the Distribution — whether characterized as dividend income, return of capital, or gain — flow through Holdings to Fund IV and the Co-Invest Vehicle, and from those entities further to their respective limited partners and general partners. The character of the income is preserved as it passes through each partnership tier under IRC § 702(b).
3. State and Local Tax Implications. State and local tax consequences are relevant primarily in Illinois, where Nexford is headquartered and maintains its principal state tax domicile, and in Delaware, where multiple entities in the organizational chain are formed. The Distribution itself does not create a direct state tax liability at the Nexford level (because dividends paid are not deductible by the distributing corporation), but the characterization of the Distribution as dividend income at the Holdings and fund level may have state tax implications for partners who are subject to Illinois income tax or who have nexus with other states in which Nexford operates.
4. No Material Withholding Tax Obligation. No federal withholding tax is expected at the Nexford-to-Holdings level, provided that Holdings furnishes a valid IRS Form W-9 reflecting its taxpayer identification number (EIN 85-3291047). The Foreign Account Tax Compliance Act ("FATCA") provisions of IRC §§ 1471–1474 do not impose withholding obligations on distributions between domestic entities.
5. Planning Considerations and Recommended Diligence. This memorandum identifies several critical factual assumptions that must be confirmed before the analysis can be finalized, including Nexford's accumulated and current E&P, Holdings' adjusted tax basis in its Nexford stock, the absence of any entity classification election (Form 8832) for Holdings, the structure of the January 2019 acquisition (and in particular whether any election under IRC § 338 was made), and the tax characterization of the 2021 dividend recapitalization. We recommend that these items be confirmed with Nexford's CFO, Michelle Kaplan, and VP Treasury, Priya Mehta, with Nexford's independent auditor, Ashworth & Kendrick LLP (Helen Yamamoto, Engagement Partner), and with the Sponsor's outside counsel, Kellner Brandt & Associates LLP (Patricia Voss).
II. TRANSACTION STRUCTURE AND PARTIES
A. Overview of the Distribution Chain
The Distribution will occur through a multi-step chain, flowing from Nexford through Holdings to the fund-level entities, as described below.
Step 1: Distribution from Nexford to Holdings. Nexford Industrial Holdings Inc. (a Delaware corporation, EIN 36-4178552, headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173) will declare and pay a cash dividend of approximately $335,000,000 to its sole shareholder, Granite Peak NIH Holdings, LLC. The dividend will be authorized by Nexford's board of directors (or by written consent of its sole shareholder, Holdings, as may be required under Nexford's certificate of incorporation and bylaws, and subject to the applicable provisions of the Delaware General Corporation Law). The cash to fund the Distribution will be derived from the proceeds of the Term Loan B, which will be deposited into Nexford's operating accounts maintained at Crescent Harbor Bank, N.A. upon the closing of the refinancing. We expect the dividend to be declared and paid on the closing date, currently anticipated to be March 28, 2025.
Step 2: Distribution from Holdings to its Members. Granite Peak NIH Holdings, LLC (a Delaware limited liability company, EIN 85-3291047, registered office at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801) will distribute the cash received from Nexford to its two members in accordance with their respective membership interests and the distribution provisions of the Holdings LLC Agreement. Fund IV holds a 92% membership interest and will receive approximately $308,200,000. The Co-Invest Vehicle holds an 8% membership interest and will receive approximately $26,800,000.
Step 3: Further Distribution to Fund-Level Limited Partners. Fund IV and the Co-Invest Vehicle will receive their allocable shares of the Distribution proceeds. Each entity will in turn distribute or allocate such proceeds to their respective limited partners and general partners in accordance with the terms of their partnership agreements. The timing and mechanics of these downstream distributions are governed by the respective partnership agreements of Fund IV and the Co-Invest Vehicle and are beyond the scope of this memorandum, except to the extent that the tax characterization of the Distribution at each level is relevant.
The net effect of these steps is that the approximately $335,000,000 in cash dividend proceeds will flow from Nexford's balance sheet, through Holdings, and ultimately to the limited partners and general partners of Fund IV and the Co-Invest Vehicle, which include individual investors, pension funds, endowments, insurance companies, and other institutional and individual investors. The identity and tax status of these ultimate investors are relevant to the tax analysis and are discussed further below.
B. Entity Classification and Tax Status
An accurate understanding of the federal income tax classification of each entity in the organizational chain is essential to the analysis of the Distribution's tax consequences. The following sets forth the classification of each relevant entity:
Nexford Industrial Holdings Inc. Nexford is a corporation organized under the laws of the State of Delaware. As a corporation formed under state law, Nexford is automatically classified as a corporation for federal income tax purposes under Treasury Regulation § 301.7701-2(b)(1) (entities formed under a statute that refers to the entity as a corporation are treated as corporations per se). Nexford is taxable as a C corporation within the meaning of IRC § 1361(a)(2) and is subject to federal corporate income tax under IRC § 11 at the current rate of 21%. Nexford's fiscal year ends on December 31, and its state of tax residence for state income tax purposes is Illinois, where its corporate headquarters and principal place of business are located.
Granite Peak NIH Holdings, LLC. Holdings is a limited liability company organized under the laws of the State of Delaware. Under the entity classification regulations set forth in Treasury Regulation § 301.7701-3, a domestic eligible entity with two or more members is classified as a partnership for federal income tax purposes by default, unless the entity elects to be classified as a corporation by filing an IRS Form 8832 (Entity Classification Election). We assume for purposes of this memorandum that no such election has been filed and that Holdings is therefore treated as a partnership for federal income tax purposes. This assumption is critical to the analysis and must be confirmed. We recommend that Claudia Merritt or Marcus Leung confirm with Kellner Brandt & Associates LLP (Patricia Voss, Sponsor's Counsel) and with the Granite Peak deal team (Ryan Ostrowski) that (a) no entity classification election has ever been filed for Holdings on Form 8832, and (b) Holdings has consistently been treated as a partnership on all federal and state income tax returns since its formation.
Granite Peak Capital Fund IV, LP. Fund IV is a limited partnership organized under the laws of the State of Delaware. As a limited partnership with two or more partners, Fund IV is classified as a partnership for federal income tax purposes under the default rules of Treasury Regulation § 301.7701-3. The general partner of Fund IV is Granite Peak Capital GP IV, LLC, a Delaware limited liability company. Fund IV files IRS Form 1065 (U.S. Return of Partnership Income) and issues Schedule K-1s to its partners.
GP Fund IV Co-Invest, LP. The Co-Invest Vehicle is a Delaware limited partnership that is classified as a partnership for federal income tax purposes under the same default classification rules applicable to Fund IV.
Granite Peak Capital Partners, LP. The Sponsor is a Delaware limited partnership and the management company and sponsor of Fund IV and the Co-Invest Vehicle. Its managing partners are Derek Calloway and Vanessa Liu. The Sponsor's role in the transaction is limited to its position as the ultimate decision-maker with respect to the Fund's investment in Nexford; it is not a direct recipient of the Distribution.
It is important to note that because Holdings, Fund IV, and the Co-Invest Vehicle are all treated as partnerships (pass-through entities) for federal income tax purposes, the tax consequences of the Distribution ultimately rest with the individual limited partners and institutional investors in Fund IV and the Co-Invest Vehicle. These investors include taxable individuals, tax-exempt entities (pension funds, endowments, charitable foundations), insurance companies, and potentially non-U.S. persons, each of which may face different tax consequences depending on their individual circumstances.
C. Source of Funds
The Distribution is funded entirely from the proceeds of the $1,400,000,000 Term Loan B. The key terms of the Term Loan B are as follows:
• Borrower: Nexford Industrial Holdings Inc.
• Administrative Agent: Crescent Harbor Bank, N.A.
• Facility Type: Senior secured term loan B
• Principal Amount: $1,400,000,000
• Interest Rate: Adjusted Term SOFR + 400 basis points per annum, subject to a SOFR floor of 0.75%
• Maturity: March 28, 2032 (seven years from closing)
• Amortization: 1.00% per annum (quarterly payments of 0.25%)
• Collateral: First priority lien on substantially all assets of Nexford and its domestic subsidiaries
The use of proceeds for the Term Loan B is reconciled as follows:
The prior capital structure being refinanced consisted of an $875,000,000 first lien term loan (maturing June 2026, with $879,375,000 outstanding inclusive of accrued interest and fees) and a $190,000,000 revolving credit facility (maturing June 2025, currently undrawn), each governed by the Credit Agreement dated June 14, 2019, as entered into by and among Nexford, Atlas Meridian Bank, N.A., as administrative agent, and the lenders party thereto, as amended through the Fourth Amendment dated September 12, 2024 (the "Existing Credit Agreement"). The $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (issued under the Indenture dated November 8, 2021, with Pinnacle Trust Company, as trustee) remains outstanding and is not being refinanced as part of the current transaction.
D. Historical Context
The historical context of Granite Peak's investment in Nexford is relevant to the tax analysis, particularly with respect to Holdings' adjusted tax basis in its Nexford stock and the accumulated E&P of Nexford.
Granite Peak acquired Nexford in January 2019 for an enterprise value of approximately $1,650,000,000. Granite Peak's equity investment (contributed through Holdings) was approximately $725,000,000, with the balance of the acquisition price funded through the Existing Credit Agreement. At the time of the acquisition, Nexford was a diversified industrial manufacturing company with operations in advanced components, specialty coatings, precision machining, and engineered products for the aerospace, defense, automotive, and general industrial end markets.
Since the 2019 acquisition, Nexford has pursued an active bolt-on acquisition strategy, completing four acquisitions that have expanded its product offerings, geographic footprint, and customer base:
• Clearfield Tool & Die, Inc. — Acquired in 2021, a precision tooling and die manufacturing company based in Michigan.
• Summit Industrial Fabrication Co. — Acquired in 2022, a structural steel and industrial fabrication company based in South Carolina.
• Ridgepoint Specialty Coatings, LLC — Acquired in 2023, a specialty industrial coatings and surface treatment company based in Pennsylvania.
• Lakeshore Precision Engineering, Inc. — Acquired in 2024, a precision engineering and CNC machining company based in Michigan.
Each of these acquisitions generated asset basis step-ups, depreciation deductions, and potentially goodwill amortization under IRC § 197 (depending on the structure of each acquisition), all of which affect Nexford's E&P computation.
In November 2021, Nexford undertook its first dividend recapitalization, distributing $275,000,000 to Holdings (and thence to Fund IV and the Co-Invest Vehicle). That distribution was funded in part from the proceeds of the $250,000,000 Senior Unsecured Notes issuance. The tax characterization of the 2021 distribution — specifically, the extent to which it was treated as a dividend (to the extent of E&P) versus a return of capital (to the extent of Holdings' basis in Nexford stock) — is directly relevant to the current analysis, because any portion of the 2021 distribution that was characterized as a dividend would have reduced Nexford's accumulated E&P, and any portion characterized as a return of capital would have reduced Holdings' adjusted tax basis in its Nexford stock. We recommend obtaining the E&P analysis and tax characterization of the 2021 distribution from Ashworth & Kendrick LLP or from Granite Peak's tax advisors.
Following the proposed Distribution, cumulative distributions to Granite Peak and its co-investors will total approximately $610,000,000 ($275,000,000 from the 2021 recapitalization plus $335,000,000 from the proposed recapitalization). This represents approximately 84% of Granite Peak's original equity investment of $725,000,000.
III. FEDERAL INCOME TAX ANALYSIS
A. Characterization of the Distribution from Nexford to Holdings
1. General Framework under IRC Section 301
Nexford is a C corporation for federal income tax purposes, and the Distribution is a distribution of cash (property within the meaning of IRC § 317(a)) by Nexford to its sole shareholder, Holdings. Accordingly, the Distribution is governed by the provisions of IRC § 301, which provides the general framework for the tax treatment of distributions by corporations to shareholders with respect to their stock.
Under IRC § 301(c), the amount of a corporate distribution is characterized — and taxed — in the following descending priority:
(a) Dividend (IRC § 301(c)(1)). The portion of the distribution that constitutes a dividend, as defined in IRC § 316, is included in the gross income of the shareholder. Under IRC § 316(a), a dividend is any distribution of property made by a corporation to its shareholders out of (i) its earnings and profits accumulated after February 28, 1913, or (ii) its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made. The dividend portion is treated as ordinary income, subject to potential qualification for preferential tax rates (discussed in subsection 3 below).
(b) Return of Capital (IRC § 301(c)(2)). The portion of the distribution that is not a dividend (because it exceeds E&P) is applied against and reduces the shareholder's adjusted basis in its stock. This portion is not included in the shareholder's gross income and is, in effect, a tax-free recovery of the shareholder's investment. However, basis cannot be reduced below zero.
(c) Gain from Sale or Exchange (IRC § 301(c)(3)). The portion of the distribution that exceeds both E&P and the shareholder's adjusted basis in its stock is treated as gain from the sale or exchange of property. This gain will generally be capital gain (long-term if the stock has been held for more than one year), and will be taxed at the applicable capital gains rate.
The characterization waterfall under IRC § 301(c) must be applied in the order specified above. Thus, the critical threshold determinations are (i) the amount of Nexford's available E&P (both accumulated and current) at the time of the Distribution, and (ii) Holdings' adjusted tax basis in its Nexford stock immediately prior to the Distribution.
2. Earnings and Profits Analysis
Importance of the E&P Determination. The E&P analysis is the single most important factual determination for purposes of characterizing the Distribution. If Nexford's combined accumulated and current E&P equals or exceeds $335,000,000 at the time of the Distribution, the entire Distribution will be characterized as a taxable dividend. If E&P is less than $335,000,000, the shortfall will be characterized as a return of capital (and potentially as gain), which has different — and potentially more favorable — tax consequences for certain categories of investors.
E&P is a tax concept that differs from retained earnings as reported for financial accounting (GAAP) purposes. E&P generally reflects a corporation's economic ability to pay dividends, computed using tax accounting methods but with numerous adjustments that cause it to diverge from both taxable income and book income. Among the significant differences: E&P includes tax-exempt income, is reduced by federal income taxes paid (but not by state income taxes in certain computations), uses a specific depreciation methodology (generally the Alternative Depreciation System under IRC § 168(g)), and requires capitalization and amortization of certain expenditures that may be currently deductible for taxable income purposes.
Accumulated E&P. Nexford's accumulated E&P must be calculated from the date of the January 2019 acquisition (or, more precisely, from the beginning of Nexford's existence as a corporation, including any pre-acquisition accumulated E&P that carries over to the new ownership period) through the date immediately preceding the Distribution. Upon Granite Peak's acquisition of Nexford in January 2019, Nexford's historical accumulated E&P would have been determined at that point, and any pre-acquisition E&P would carry over to the post-acquisition period under general principles. See IRC § 381 (carryover of earnings and profits in certain corporate acquisitions); however, if the acquisition was structured as a stock purchase without a § 338 election, Nexford's pre-acquisition E&P would remain intact.
Since the January 2019 acquisition, Nexford has accumulated additional E&P based on its operating results, adjusted for the differences between taxable income and E&P. This accumulated E&P must also be reduced by the 2021 dividend recapitalization of $275,000,000 to the extent that distribution was characterized as a dividend (i.e., paid out of E&P). If the entire 2021 distribution was treated as a dividend, accumulated E&P as of the date of that distribution was reduced by $275,000,000.
We recommend obtaining from Ashworth & Kendrick LLP (Helen Yamamoto, Engagement Partner) or from Nexford's CFO, Michelle Kaplan, Nexford's E&P schedules as of December 31, 2024, together with a pro forma computation of E&P through the anticipated Distribution date of March 28, 2025. If these schedules are not currently maintained in a format suitable for tax analysis, we can assist in preparing the E&P computation based on Nexford's tax returns and financial statements.
Current E&P for 2025. Under IRC § 316(a)(2), a distribution is treated as a dividend to the extent of the corporation's current-year E&P, computed as of the close of the taxable year, regardless of the amount of E&P at the time the distribution is actually made. This is significant because it means that even if Nexford's accumulated E&P (as of January 1, 2025) is insufficient to cover the $335,000,000 Distribution, Nexford's current E&P for the entire 2025 taxable year is taken into account.
Moreover, when a corporation makes a single distribution during the taxable year, the full year's current E&P is available to support dividend characterization. If a corporation makes multiple distributions during the taxable year, current E&P is allocated ratably among the distributions on a pro rata basis based on the relative size of each distribution. See Treasury Regulation § 1.316-2(b). An early-year distribution (such as the proposed March 28, 2025 Distribution) thus benefits from the availability of the full year's current E&P.
Key Financial Metrics Relevant to E&P Estimation. The following financial data points, derived from the Confidential Information Memorandum and management presentations provided in connection with the refinancing, are relevant to a preliminary estimation of Nexford's E&P:
• LTM Revenue (as of December 31, 2024): $2,100,000,000
• LTM Reported EBITDA: $357,000,000
• LTM Adjusted EBITDA (inclusive of $28,000,000 in add-backs): $385,000,000
• EBITDA Add-Backs ($28,000,000 in aggregate):
• Acquisition-related costs: $12,000,000
• Non-recurring restructuring charges: $8,500,000
• Sponsor management fees: $4,500,000
• Integration costs: $3,000,000
• Capital Expenditures: Approximately $78,000,000 per year
• Pro Forma Cash Interest Expense (Year 1): Approximately $117,708,500 (estimated all-in rate of approximately 8.45% on the Term Loan B)
• Existing Notes Interest Expense: Approximately $18,125,000 per year (7.250% × $250,000,000)
It is important to emphasize that EBITDA (and Adjusted EBITDA) is not a substitute for E&P. EBITDA is an earnings metric that excludes interest, taxes, depreciation, and amortization, whereas E&P is computed using specific tax accounting rules that diverge significantly from GAAP and from the Adjusted EBITDA concept used in leveraged finance. Not all EBITDA add-backs correspond to E&P adjustments. For example, non-recurring restructuring charges may be deductible for both taxable income and E&P purposes, in which case the add-back would not affect E&P. Similarly, sponsor management fees may or may not be deductible depending on their characterization for tax purposes. E&P must be computed independently using Nexford's federal income tax return data (IRS Form 1120) as a starting point, with the specific adjustments required by Treasury Regulation § 1.312-6 and related provisions.
Furthermore, Nexford's four bolt-on acquisitions (Clearfield Tool & Die, Inc. in 2021, Summit Industrial Fabrication Co. in 2022, Ridgepoint Specialty Coatings, LLC in 2023, and Lakeshore Precision Engineering, Inc. in 2024) would have generated stepped-up asset bases, additional depreciation deductions (computed using the E&P depreciation method under IRC § 312(k)), and potentially IRC § 197 amortization of goodwill and other intangibles. The net effect of these acquisitions on E&P depends on the structure of each acquisition (stock versus asset purchase), the allocation of purchase price among acquired assets, and the depreciation and amortization schedules applicable to the acquired assets for E&P purposes.
Preliminary Assessment. Based on the available financial data — in particular, the reported LTM EBITDA of $357,000,000 and the history of consistent profitability since the 2019 acquisition — it is our preliminary assessment that Nexford's accumulated E&P (inclusive of the ratable allocation of 2025 current E&P) will likely be sufficient to characterize a substantial portion, and quite possibly all, of the approximately $335,000,000 Distribution as a taxable dividend. This assessment is based on the following reasoning:
Nexford has reported EBITDA in excess of $300,000,000 in each of the last several fiscal years. Even after accounting for (i) interest expense (which was lower under the prior credit facility than it will be post-refinancing), (ii) depreciation and amortization (computed for E&P purposes), (iii) federal and state income taxes paid, (iv) capital expenditures (to the extent they generate E&P depreciation), and (v) the $275,000,000 reduction in accumulated E&P from the 2021 dividend recapitalization, cumulative E&P over the period from January 2019 through March 2025 — a period of approximately six years and three months — would be expected to substantially exceed the $335,000,000 Distribution. By way of rough illustration, if Nexford's annual taxable income (before interest expense and tax) has averaged even $200,000,000 per year, cumulative taxable income over six-plus years would exceed $1,200,000,000 before interest and taxes. After deducting interest expense (averaging perhaps $60,000,000 to $75,000,000 per year under the prior credit facility), federal income taxes (at 21%), and state income taxes (at approximately 5%-9%), cumulative after-tax income would likely be in the range of $500,000,000 to $700,000,000. After reducing for the 2021 dividend of $275,000,000 and making the various E&P adjustments, remaining accumulated E&P is likely to be substantial — though the precise amount cannot be determined without access to Nexford's tax returns and E&P schedules.
However, this is a preliminary and illustrative analysis only, and we emphasize that the E&P computation is inherently complex and fact-intensive. E&P is reduced not only by federal and state income taxes paid, but also by non-deductible expenses, certain penalties, and the excess of E&P depreciation over tax depreciation. The four bolt-on acquisitions may have generated significant additional depreciation deductions for E&P purposes that would reduce E&P below what a simple back-of-the-envelope calculation might suggest. Additionally, the 2021 distribution's characterization (i.e., the extent to which it was treated as a dividend versus a return of capital) directly affects the accumulated E&P available for the proposed Distribution.
Action Item: We strongly recommend that the Banking & Finance team request, as soon as practicable, Nexford's accumulated E&P schedule as of December 31, 2024, and a projected computation of 2025 current E&P through the Distribution date, from Ashworth & Kendrick LLP (Helen Yamamoto) or from Nexford's finance team (Michelle Kaplan, CFO, and Priya Mehta, VP Treasury). If accumulated plus current E&P equals or exceeds $335,000,000, the entire Distribution will be treated as a dividend. If E&P is less than $335,000,000, the excess will be treated as a return of capital or gain, as described in subsections 4 and 5 below.
3. Dividend Treatment Consequences
To the extent the Distribution (or any portion thereof) is characterized as a dividend under IRC § 316, the following tax consequences result:
At the Holdings Level. The dividend income is includable in Holdings' gross income. However, because Holdings is classified as a partnership for federal income tax purposes, it is not itself subject to federal income tax. Rather, the dividend income passes through to Holdings' members — Fund IV (92%) and the Co-Invest Vehicle (8%) — in accordance with the allocation provisions of the Holdings LLC Agreement. Each member's distributive share of the dividend income is reported on the Schedule K-1 issued by Holdings and is included in the member's gross income.
Dividends Received Deduction (DRD). If any partner of Holdings (or of Fund IV or the Co-Invest Vehicle) is itself a C corporation, such partner may be entitled to a dividends received deduction under IRC §§ 243 through 246A. The DRD is intended to mitigate the triple-taxation that would otherwise result when dividend income flows from a C corporation (Nexford), through one or more tiers of entities, to a corporate investor. The amount of the DRD depends on the percentage of the distributing corporation's stock owned by the recipient corporation: 50% for ownership of less than 20%, 65% for ownership of 20% or more but less than 80%, and 100% for ownership of 80% or more (subject to the limitations of IRC § 246A for debt-financed portfolio stock).
In the case of a dividend received by a partnership, the DRD is determined at the partner level, not the partnership level. See IRC § 702(a)(5) (dividends with respect to which the DRD is allowable are separately stated items of the partnership); Treasury Regulation § 1.702-1(a)(4). Each partner that is a C corporation computes its DRD based on its own circumstances, including its indirect ownership percentage in Nexford (determined by looking through the partnership). Because Holdings owns 100% of Nexford's stock, a corporate partner's indirect ownership percentage will depend on its interest in Holdings (through Fund IV or the Co-Invest Vehicle). This analysis is complex and fact-specific, and the availability and amount of the DRD must be determined separately for each corporate partner. We note that the majority of limited partners in Fund IV are likely institutional investors (pension funds, endowments, insurance companies) rather than C corporations, but this should be confirmed with the Granite Peak deal team.
Qualified Dividend Income for Individual Partners. For partners who are individuals (including, potentially, the managing partners of the Sponsor, Derek Calloway and Vanessa Liu, and any individual limited partners of Fund IV or the Co-Invest Vehicle), dividend income from a domestic C corporation may qualify for the preferential tax rates applicable to "qualified dividend income" under IRC § 1(h)(11). Qualified dividends are currently taxed at a maximum federal rate of 20% (plus the 3.8% net investment income tax ("NIIT") under IRC § 1411, for a combined maximum rate of 23.8%), rather than at the ordinary income rates that would otherwise apply (maximum 37% plus 3.8% NIIT = 40.8%).
To qualify for the preferential rate, the dividend must be paid by a domestic corporation (Nexford is a domestic corporation) and the shareholder must satisfy a holding period requirement: the shareholder must have held the stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. See IRC § 1(h)(11)(B)(iii); IRC § 246(c). This holding period requirement applies at the entity level most directly holding the stock — here, Holdings. Holdings has held Nexford stock continuously since January 2019, which is well in excess of the 60-day holding period requirement. Accordingly, we expect the qualified dividend income requirements to be satisfied, and the dividend income flowing through to individual partners should be eligible for the preferential 20% rate (plus NIIT) rather than ordinary income rates.
The difference in effective tax rates is significant. For an individual limited partner in the highest marginal bracket, the effective federal rate on qualified dividend income is 23.8%, compared to 40.8% on ordinary income. On a $335,000,000 distribution, the aggregate federal tax differential across all individual investors could be substantial, though the precise amount depends on the individual circumstances of each investor.
4. Return of Capital Treatment
To the extent the Distribution exceeds Nexford's accumulated and current E&P (if E&P is insufficient to cover the entire $335,000,000 Distribution), the excess is applied against and reduces Holdings' adjusted tax basis in its Nexford stock under IRC § 301(c)(2). This portion of the Distribution is not included in Holdings' gross income and is not subject to federal income tax. It is, in effect, a tax-free recovery of Holdings' invested capital.
Holdings' Tax Basis in Nexford Stock. Holdings' adjusted tax basis in its Nexford stock was initially established at the time of the January 2019 acquisition. The initial basis would have been the cost of the stock — generally the purchase price paid by Holdings for the Nexford shares. Granite Peak's equity investment (contributed through Holdings) was approximately $725,000,000, though Holdings' tax basis may differ from this amount depending on the precise acquisition structure.
If the January 2019 acquisition was structured as a stock purchase (without any IRC § 338 election), Holdings' tax basis in its Nexford stock would generally be equal to the purchase price paid for the stock (approximately $725,000,000 in equity, which represents the total enterprise value of $1,650,000,000 less the acquisition debt). This basis could subsequently have been adjusted for prior return-of-capital distributions, if any.
If, alternatively, an election under IRC § 338(h)(10) was made in connection with the acquisition (treating the stock purchase as a deemed asset acquisition for tax purposes), the tax consequences would differ significantly. A § 338(h)(10) election would have resulted in a step-up in the tax basis of Nexford's underlying assets to fair market value, with corresponding changes to the depreciation and amortization schedules. In such case, Holdings' tax basis in its Nexford stock would be determined under the "new target" rules of Treasury Regulation § 1.338-5, and could differ substantially from the purchase price paid. Moreover, a § 338(h)(10) election would have affected Nexford's accumulated E&P (the old target's E&P would be eliminated, and the new target would start with zero E&P on the day after the acquisition date). This would have a significant impact on the E&P analysis and the characterization of the Distribution.
Impact of the 2021 Distribution on Holdings' Tax Basis. If any portion of the 2021 dividend recapitalization ($275,000,000) was treated as a return of capital (i.e., exceeded E&P at the time of that distribution), Holdings' adjusted tax basis in its Nexford stock would have been reduced by such amount. This would reduce the basis cushion available to absorb any return-of-capital portion of the current Distribution.
Action Item: We recommend confirming Holdings' current adjusted tax basis in its Nexford stock as of the date immediately prior to the Distribution. This information should be available from Kellner Brandt & Associates LLP (Patricia Voss) or from the Granite Peak tax team.
5. Gain Recognition
To the extent the Distribution exceeds both Nexford's E&P and Holdings' adjusted tax basis in its Nexford stock, the excess is treated as gain from the sale or exchange of property — specifically, as gain from the deemed sale of Holdings' Nexford stock — under IRC § 301(c)(3). Because Holdings has held Nexford stock continuously since January 2019 (more than one year), any gain recognized under this provision would be long-term capital gain.
Because Holdings is a partnership for federal income tax purposes, any such gain would be allocated among its members in accordance with the Holdings LLC Agreement and would retain its character as long-term capital gain as it flows through to Fund IV (92%) and the Co-Invest Vehicle (8%), and further to their respective limited partners. The tax rate applicable to such gain depends on the identity and tax status of each ultimate partner:
• Individual partners: Subject to a maximum federal long-term capital gains rate of 20%, plus the 3.8% NIIT, for a combined maximum rate of 23.8%.
• Corporate partners: Subject to the federal corporate income tax rate of 21% (capital gains of corporations are taxed at the same rate as ordinary income).
• Tax-exempt partners: Generally not subject to tax on long-term capital gain, unless the gain constitutes unrelated business taxable income ("UBTI") — which, as discussed in Section III.D below, is generally not expected to be the case here.
We consider it unlikely, based on our preliminary assessment of Nexford's E&P and Holdings' basis, that any portion of the Distribution will be characterized as gain under IRC § 301(c)(3). However, this conclusion is contingent on the E&P and basis diligence described above.
B. Tax Consequences at the Holdings (Partnership) Level
1. Pass-Through Treatment
As noted above, Granite Peak NIH Holdings, LLC is classified as a partnership for federal income tax purposes. As such, Holdings is not subject to entity-level federal income tax. Rather, all items of income, gain, loss, deduction, and credit flow through to Holdings' members — Fund IV and the Co-Invest Vehicle — in accordance with the allocation provisions of the Holdings LLC Agreement and the applicable provisions of Subchapter K (IRC §§ 701–777).
Holdings must file an annual IRS Form 1065 (U.S. Return of Partnership Income) and must issue Schedule K-1 (Partner's Share of Income, Deductions, Credits, etc.) to each of its members. The Distribution received from Nexford will be reflected on Holdings' Form 1065 in accordance with its tax characterization (dividend income, return of capital, or gain, as determined under the IRC § 301(c) waterfall), and each member's allocable share will be reported on its Schedule K-1.
The allocation of the Distribution's tax consequences between Fund IV (92%) and the Co-Invest Vehicle (8%) will be governed by the allocation provisions of the Holdings LLC Agreement. Under the general rules of IRC § 704(b), allocations set forth in the partnership agreement will be respected for tax purposes if they have "substantial economic effect." We recommend that the Banking & Finance team obtain and review the Holdings LLC Agreement — specifically, the provisions governing allocations, distributions, capital accounts, and distribution waterfalls — to confirm that the allocations of the Distribution will be respected under the substantial economic effect safe harbor of Treasury Regulation § 1.704-1(b)(2). Kellner Brandt & Associates LLP (Patricia Voss) should be able to provide the current version of the Holdings LLC Agreement.
2. Adjustments to Members' Capital Accounts and Outside Basis
The cash distribution from Holdings to its members (Fund IV and the Co-Invest Vehicle) will reduce each member's capital account and "outside" basis in its Holdings interest. Under IRC § 733, a partner's basis in its partnership interest is reduced (but not below zero) by the amount of money distributed to the partner.
If the cash distribution to a member exceeds that member's adjusted basis in its partnership interest (its "outside basis"), the excess is treated as gain from the sale or exchange of the partnership interest under IRC § 731(a)(1). Such gain would generally be capital gain and, given that Fund IV and the Co-Invest Vehicle have each held their interests in Holdings since January 2019, would likely be long-term capital gain.
It is important to assess whether the cumulative distributions from Holdings to Fund IV and the Co-Invest Vehicle have exceeded (or will exceed) these members' outside bases. The relevant data points are as follows:
• Granite Peak's original equity investment (through Holdings): approximately $725,000,000
• Prior distribution from Holdings to members (2021): $275,000,000
• Proposed Distribution from Holdings to members: $335,000,000
• Cumulative distributions: $610,000,000
At first glance, the cumulative distributions of $610,000,000 are less than the original equity investment of $725,000,000, suggesting that outside basis should remain positive. However, outside basis is not static — it is adjusted annually to reflect the member's distributive share of partnership income, gain, loss, and deductions under IRC § 705(a). If Holdings has allocated income to its members in each year since 2019 (as would be expected given Nexford's profitability), the members' outside bases would have been increased by the cumulative allocated income and decreased by the cumulative distributions. Conversely, if Holdings has allocated losses or deductions, outside basis could be lower than the original contribution.
Given the complexity of this computation, which depends on six years of partnership-level allocations, we recommend confirming each member's outside basis in its Holdings interest with the Sponsor's tax advisors (Kellner Brandt & Associates LLP or the Granite Peak tax team).
C. Tax Consequences at the Fund IV and Co-Invest Vehicle Level
Both Fund IV and the Co-Invest Vehicle are Delaware limited partnerships that are treated as partnerships for federal income tax purposes. Accordingly, the same pass-through principles described above with respect to Holdings apply at the fund level: income, gain, loss, deduction, and credit items flow through from Holdings to Fund IV and the Co-Invest Vehicle, and from those entities further to their respective limited partners and general partner.
The character of the income — whether ordinary dividend income, return of capital, or capital gain — is preserved as it flows through each partnership tier. IRC § 702(b) provides that the character of any item of income, gain, loss, deduction, or credit included in a partner's distributive share shall be determined as if such item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership. This means that dividend income from Nexford retains its character as dividend income when it flows through Holdings to Fund IV and the Co-Invest Vehicle, and from those entities to their respective partners. Similarly, if any portion of the Distribution is characterized as long-term capital gain, it retains that character through each tier.
Each of Fund IV and the Co-Invest Vehicle must file IRS Form 1065 and issue Schedule K-1s to their respective partners reflecting the character of the income allocable to each partner. The allocation of income among partners at the fund level will be governed by the respective partnership agreements, including any provisions for preferred returns, carried interest, management fee offsets, and distribution waterfalls. These provisions may result in allocations that differ from the simple pro rata allocation suggested by membership percentages, and may have implications for the timing and character of income allocated to the general partner (carried interest) versus the limited partners.
D. Unrelated Business Taxable Income (UBTI) Considerations
Certain limited partners of Fund IV (and potentially of the Co-Invest Vehicle) may be tax-exempt entities, including qualified pension and profit-sharing plans under IRC § 401(a), individual retirement accounts under IRC § 408, state and local government pension plans, charitable organizations described in IRC § 501(c)(3), university endowments, and similar tax-exempt investors. These entities are generally exempt from federal income tax on investment income, but are subject to tax on "unrelated business taxable income" under IRC §§ 511–514.
Dividend Income and UBTI. Dividend income is generally not UBTI. Under IRC § 512(b)(1), dividends are excluded from the computation of UBTI. Accordingly, to the extent the Distribution is characterized as a dividend, it should not constitute UBTI for tax-exempt partners, and such partners should not be subject to federal income tax on their allocable share of the dividend.
Debt-Financed Income Exception. An exception to this general exclusion exists for "debt-financed" income under IRC § 514. If a tax-exempt organization (or a partnership in which it is a partner) holds "debt-financed property," a proportionate share of the income from such property is treated as UBTI. The term "debt-financed property" generally means property held to produce income with respect to which there is "acquisition indebtedness."
In the present case, the $1,400,000,000 Term Loan B is incurred at the Nexford level — that is, by a C corporation. The debt is not incurred by Holdings, Fund IV, or the Co-Invest Vehicle. The Distribution to Holdings is a dividend from a C corporation, not income from a debt-financed investment held by the partnership. The leveraging occurs below the C corporation level, and the C corporation effectively serves as a "Blocker" that prevents the debt from creating UBTI at the partnership and tax-exempt investor level. This is one of the principal tax planning advantages of the structure, in which the portfolio company is a C corporation (rather than a pass-through entity) and the debt is incurred at the C corporation level.
Accordingly, the debt-financed property rules of IRC § 514 should not create UBTI at the tax-exempt partner level with respect to the Distribution. Similarly, if any portion of the Distribution is characterized as return of capital or gain (rather than dividend), the same analysis applies — gain on the sale of stock by a tax-exempt entity is generally not UBTI unless the stock itself is debt-financed property, which it should not be in this structure.
Recommendation. We recommend confirming with the Granite Peak deal team that no tax-exempt investors have raised specific UBTI concerns in connection with the proposed Distribution. To the extent any tax-exempt limited partners have specific UBTI concerns or have requested tax opinions or representations, those matters should be addressed separately.
E. Withholding Tax Considerations at the Nexford-to-Holdings Level
Because Holdings is a domestic entity (a Delaware limited liability company organized under the laws of the State of Delaware), and assuming Holdings furnishes a valid IRS Form W-9 (Request for Taxpayer Identification Number and Certification) reflecting its taxpayer identification number (EIN 85-3291047), no federal withholding tax is required on the Distribution from Nexford to Holdings.
IRC § 1441 imposes a 30% withholding tax on certain payments of U.S.-source income (including dividends) to nonresident alien individuals. IRC § 1442 imposes a similar withholding obligation on payments to foreign corporations. Neither provision applies to payments to domestic entities. Holdings, as a domestic limited liability company classified as a partnership, is not a foreign person, and the withholding provisions of IRC §§ 1441 and 1442 are inapplicable.
The Foreign Account Tax Compliance Act ("FATCA"), codified at IRC §§ 1471–1474, imposes a 30% withholding tax on certain "withholdable payments" made to "foreign financial institutions" and "non-financial foreign entities" that fail to comply with specified reporting and compliance requirements. FATCA does not impose withholding obligations on payments between domestic entities. Because both Nexford and Holdings are domestic entities, FATCA is not applicable to the Distribution.
We note that separate withholding tax considerations may arise in connection with interest payments on the Term Loan B to syndicate lenders, including any non-U.S. lenders in the syndication group. Those issues will be addressed in the separate Tax Memorandum — Withholding Tax Considerations for Lenders, which is currently being prepared and is expected to be completed by March 7, 2025.
F. IRC Section 163(j) Interaction
Although the deductibility of interest on the Term Loan B is not the primary focus of this memorandum and will be addressed in a separate Tax Memorandum — Deductibility of Interest on Term Loan B (Section 163(j) Analysis), expected by March 5, 2025, it is appropriate to note the interaction between the increased debt burden and the E&P analysis, as well as the broader tax posture of Nexford following the refinancing.
Under IRC § 163(j), the deductibility of "business interest expense" is limited to the sum of (i) business interest income, (ii) 30% of the taxpayer's "adjusted taxable income" ("ATI"), and (iii) floor plan financing interest (not applicable here). For taxable years beginning after December 31, 2021, ATI is computed without adding back depreciation, amortization, or depletion — effectively tightening the limitation relative to the pre-2022 rules that used an EBITDA-like proxy.
The increased debt from the $1,400,000,000 Term Loan B, combined with the $250,000,000 of outstanding Senior Unsecured Notes, will significantly increase Nexford's annual interest expense. Estimated pro forma annual interest expense is approximately as follows:
Using Nexford's LTM Adjusted EBITDA of $385,000,000 as a rough proxy for ATI (acknowledging that ATI is computed differently and does not include depreciation and amortization add-backs for tax years beginning after 2021), the 30% ATI limitation would allow deduction of approximately $115,500,000 per year. This suggests a potential annual disallowance of approximately $20,333,500 ($135,833,500 total interest expense minus $115,500,000 allowable deduction), resulting in a disallowed interest carryforward under IRC § 163(j)(2) that may be carried forward indefinitely and deducted in future taxable years to the extent the limitation permits.
The significance of the Section 163(j) limitation for purposes of the present memorandum is twofold:
First, disallowed interest expense under IRC § 163(j) nonetheless reduces E&P. Under Treasury Regulation § 1.312-6, E&P is reduced by all interest expense incurred by the corporation, regardless of whether such interest is currently deductible for taxable income purposes. Accordingly, the Section 163(j) limitation will create a divergence between taxable income and E&P: taxable income will be higher (because the disallowed interest is not deductible), while E&P will be lower (because the disallowed interest still reduces E&P). This means that in future years, Nexford's E&P will be reduced by the full amount of interest expense, even if a portion is not currently deductible for income tax purposes. Over time, this could reduce the E&P available to support future distributions.
Second, the disallowed interest carryforward will increase Nexford's deferred tax asset (for financial accounting purposes) and will reduce future taxable income if and when the carryforward is utilized.
A detailed analysis of these issues will be provided in the separate Section 163(j) memorandum.
G. Impact of the Distribution on Nexford's Tax Attributes
The Distribution of approximately $335,000,000 in cash from Nexford to Holdings does not directly affect Nexford's taxable income for federal or state income tax purposes. Dividends paid by a corporation to its shareholders are not deductible by the distributing corporation. See IRC § 311(a) (no gain or loss is recognized to a corporation on the distribution of property to its shareholders with respect to its stock, except as provided in IRC § 311(b), which applies only to distributions of appreciated property, not cash).
The Distribution does, however, affect the following tax attributes and financial metrics of Nexford:
• Accumulated E&P. Nexford's accumulated E&P is reduced by the amount of the Distribution that is characterized as a dividend. If the entire $335,000,000 Distribution is treated as a dividend, accumulated E&P is reduced by $335,000,000. This reduction may limit the ability to characterize future distributions as dividends and may affect the tax treatment of any subsequent distribution to Holdings.
• Balance Sheet Impact. The Distribution reduces Nexford's cash and total assets by $335,000,000. This does not directly affect Nexford's tax attributes (NOL carryforwards, credit carryforwards, Section 163(j) carryforwards, etc.) but does affect the company's liquidity, leverage ratios, and overall financial position.
• No IRC § 311(b) Gain. Because the Distribution is a cash distribution (not a distribution of appreciated property), no gain is recognized by Nexford under IRC § 311(b). If Nexford were distributing appreciated property (e.g., stock of a subsidiary or real property with a fair market value in excess of its adjusted tax basis), Nexford would recognize gain as if the property had been sold at fair market value. This issue does not arise here.
• No Impact on NOL Carryforwards. The Distribution does not reduce or affect any net operating loss ("NOL") carryforwards that Nexford may have. NOL carryforwards are a separate tax attribute that is not affected by the payment of dividends.
• No Impact on Other Tax Attributes. The Distribution does not affect Nexford's tax credit carryforwards, Section 163(j) disallowed interest carryforwards, or other tax attributes, except to the extent the reduction in E&P may indirectly affect the characterization of future distributions.
IV. STATE AND LOCAL TAX ANALYSIS
A. Illinois
Nexford's state of tax residence is Illinois, where it maintains its corporate headquarters at 1400 Industrial Parkway, Schaumburg, Illinois 60173, and files its state income tax returns. Nexford's fiscal year ends on December 31. The state tax implications of the Distribution are analyzed below.
Illinois Corporate Income Tax at the Nexford Level. Nexford is subject to the Illinois corporate income tax, which currently consists of two components: (i) a corporate income tax at a rate of 7.0%, and (ii) a personal property replacement tax applicable to corporations at a rate of 2.5%, for a combined effective rate of 9.5%. The Distribution itself does not create a new tax liability for Nexford in Illinois, because dividends paid by a corporation to its shareholders are not deductible for Illinois income tax purposes (consistent with the federal treatment). However, the E&P that funded (or will fund) the Distribution was previously subject to Illinois income tax to the extent that Nexford's Illinois-apportioned taxable income generated the E&P in prior years. In other words, the earnings from which the dividend is paid have already been taxed at the Illinois level.
It should be noted that Illinois uses a single sales factor apportionment formula for purposes of apportioning the taxable income of multistate corporations. Nexford's Illinois apportionment factor depends on the ratio of its Illinois sales to its total sales. Because Nexford's manufacturing operations span multiple states (Illinois, South Carolina, Texas, Michigan, Pennsylvania, and Canada), a significant portion of Nexford's taxable income may be apportioned away from Illinois and taxed in other states. The Illinois apportionment factor is relevant to the overall E&P computation (because state income taxes paid reduce E&P) and to the future state tax posture of Nexford following the refinancing.
Illinois Treatment of the Dividend at the Holdings Level. Holdings, as a pass-through entity for federal income tax purposes, is also generally treated

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INTERNAL TAX MEMORANDUM

I. EXECUTIVE SUMMARY

II. TRANSACTION STRUCTURE AND PARTIES

III. FEDERAL INCOME TAX ANALYSIS

IV. STATE AND LOCAL TAX ANALYSIS

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