1005-00001 · Nexford Industrial Holdings · Term Sheet & Commitment Letter

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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is prepared in anticipation of litigation and/or to provide legal advice. It is not to be disclosed to any person or entity outside of Calderwood & Harkness LLP without the express written authorization of a responsible partner on this matter.

TO: Claudia Merritt, Responsible Partner Ian Blackwood, Billing Partner

FROM: Marcus Leung, Lead Associate Sophie Tremblay, Working Associate

DATE: February 11, 2025

RE: Nexford Industrial Holdings Inc. — $1,400,000,000 Senior Secured Term Loan B — Summary of Key Economic and Legal Terms

Matter No.: 1005-00001

Client/Matter Code: IBL-NIH-2025-031

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I. Purpose and Background

The purpose of this memorandum is to summarize the key economic and legal terms for the proposed $1,400,000,000 senior secured Term Loan B facility (the "Facility") as reflected in the term sheet negotiations to date. Specifically, the analysis herein is based upon (a) the initial term sheet received on February 5, 2025 from Crescent Harbor Bank, N.A. ("Crescent Harbor"), (b) the Calderwood & Harkness LLP ("C&H") marked version of such term sheet delivered to Whitfield & Gage LLP ("W&G"), counsel to the administrative agent, on February 10, 2025, and (c) various discussions and correspondence with the transaction participants described below. This memorandum identifies which terms are agreed-upon, which remain open or under discussion, and which will require further attention during the credit agreement drafting phase.

Background. Nexford Industrial Holdings Inc. ("Nexford" or the "Borrower") is a Delaware corporation headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173. Nexford is a portfolio company of Granite Peak Capital Partners, LP ("Granite Peak" or the "Sponsor"), and is held through Granite Peak NIH Holdings, LLC ("Holdings"), a Delaware limited liability company that serves as the direct parent of and 100% equity holder in Nexford. Granite Peak acquired Nexford in January 2019 through Granite Peak Capital Fund IV, LP for an enterprise value of approximately $1,650,000,000, with an equity investment of approximately $725,000,000. The equity interest in Holdings is held 92% by Granite Peak Capital Fund IV, LP and 8% by GP Fund IV Co-Invest, LP.

Nexford operates as a diversified industrials and specialty manufacturing platform. As of the last twelve months ("LTM") ended December 31, 2024, Nexford reported revenue of approximately $2.1 billion and LTM Adjusted EBITDA of $385,000,000. The business is organized across three operating segments: Precision Components (approximately 52% of revenue), Engineered Systems (approximately 31% of revenue), and Industrial Coatings & Surface Technologies (approximately 17% of revenue). Nexford currently operates 14 manufacturing facilities across North America and employs approximately 8,400 people.

The proposed transaction involves a refinancing of Nexford's existing credit facilities with Atlas Meridian Bank, N.A. ("Atlas Meridian") and a dividend recapitalization to Granite Peak and its co-investors. The existing first lien term loan of $875,000,000 and the existing revolving credit facility with $190,000,000 in commitments (currently undrawn) will each be terminated and refinanced as part of this transaction. In connection with the refinancing, Nexford will distribute approximately $335,000,000 to Holdings, and thence to the equity holders, as a dividend recapitalization. Crescent Harbor will serve as sole lead left arranger, bookrunner, administrative agent, and collateral agent for the Facility.

The commitment letter is expected to be executed on or about February 14, 2025. The fee letter is expected to follow on or about February 18, 2025. These dates remain subject to the finalization of outstanding negotiation points and the satisfaction of certain preliminary conditions.

This memorandum is based upon the term sheet as marked by C&H, as well as discussions with the Nexford deal team, specifically Priya Mehta (Vice President, Treasury) and David Engstrom (General Counsel), and the Granite Peak deal team, specifically Ryan Ostrowski (Principal). We have also drawn upon financial information provided by Stonebridge Advisory Group, LLC ("Stonebridge"), Nexford's financial advisor, and rating agency materials prepared in anticipation of presentations to Keystone Ratings Group and Sentinel Credit Analytics.

II. Transaction Overview

A. Transaction Type

The proposed transaction is a senior secured Term Loan B (institutional term loan) structured as a refinancing of existing credit facilities and a simultaneous dividend recapitalization. The Facility will be marketed and syndicated to institutional lenders in the broadly syndicated loan market through a customary bookbuild process led by Crescent Harbor.

B. Parties. The following sets forth the principal parties to the transaction:

Borrower: Nexford Industrial Holdings Inc., a Delaware corporation, with its principal place of business at 1400 Industrial Parkway, Schaumburg, Illinois 60173.

Holdings Guarantor: Granite Peak NIH Holdings, LLC, a Delaware limited liability company and the direct parent of Nexford, holding 100% of the equity interests in the Borrower.

Sponsor: Granite Peak Capital Partners, LP, acting through the following investment vehicles:

• Granite Peak Capital Fund IV, LP — holding a 92% equity interest in Holdings

• GP Fund IV Co-Invest, LP — holding an 8% equity interest in Holdings

Administrative Agent / Collateral Agent: Crescent Harbor Bank, N.A., a national banking association, with offices at 320 Federal Street, Boston, Massachusetts 02110.

Lead Left Arranger and Bookrunner: Crescent Harbor Bank, N.A.

Joint Lead Arrangers (anticipated): To be determined during the syndication process. The current expectation, based on discussions with the Crescent Harbor syndication desk, is that at least two additional institutions will be brought on as joint lead arrangers to facilitate broad distribution.

Arranger's / Agent's Counsel: Whitfield & Gage LLP. The lead partner for W&G on this engagement is Margaret Ashby.

Borrower's Counsel: Calderwood & Harkness LLP.

Sponsor's Counsel: Kellner Brandt & Associates LLP. The lead partner for KB&A on this engagement is Patricia Voss.

Financial Advisor: Stonebridge Advisory Group, LLC. The Managing Director leading the Stonebridge engagement is Andrew Castellano.

Existing Agent (to be refinanced): Atlas Meridian Bank, N.A., with offices at 500 Liberty Avenue, Pittsburgh, Pennsylvania 15222. The primary contact at Atlas Meridian is Sandra Vickers. The existing credit facilities under Atlas Meridian will be fully repaid and terminated at closing.

Existing Unsecured Notes Trustee: Pinnacle Trust Company, with offices at 101 Park Avenue, New York, New York 10178. Pinnacle Trust Company serves as trustee under the indenture governing the outstanding $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028.

C. Facility Amount

$1,400,000,000. — AGREED.

D. Facility Type

Term Loan B (institutional term loan). — AGREED.

E. Governing Law

State of New York. — AGREED.

F. Anticipated CUSIP / LoanX ID

The anticipated CUSIP number for the Facility is 65432X AA1 and the anticipated LoanX ID is LX-234567. These identifiers are preliminary and subject to confirmation upon the commencement of syndication.

III. Use of Proceeds — Detailed Breakdown

A. Sources. The sole source of funds for the transaction is the Term Loan B Facility:

B. Uses. The proceeds of the Term Loan B will be applied as follows:

Reconciliation: The total uses reconcile as follows: $879,375,000 + $335,000,000 + $38,625,000 + $147,000,000 = $1,400,000,000.

Note Regarding Existing Unsecured Notes. The existing $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (issued pursuant to the Indenture dated November 8, 2021, with Pinnacle Trust Company serving as trustee) are NOT being refinanced, redeemed, or otherwise repaid in connection with this transaction. These notes will remain outstanding following the closing of the Facility and will continue to be governed by the existing indenture. As discussed in Section IX below, an intercreditor agreement will be executed to address the priority of the first lien secured claims relative to the unsecured claims of the noteholders.

Note on Prior Distributions. Granite Peak and its co-investors previously received a distribution of $275,000,000 from a dividend recapitalization completed in 2021 (which was financed through the incurrence of the Senior Unsecured Notes and the Second Amendment to the existing Atlas Meridian credit facilities). Following the consummation of this transaction, cumulative distributions to Granite Peak and its co-investors will total approximately $610,000,000 against an original equity investment of approximately $725,000,000. This results in a cumulative return of approximately 84% of the original equity investment through distributions alone, prior to any realization event.

C. Fee and Expense Breakdown (Estimated)

The following table sets forth the estimated fees and expenses in connection with the transaction:

The legal, advisory, rating agency, and other expenses category includes C&H's fees and expenses, W&G's fees and expenses (to be reimbursed by the Borrower pursuant to the commitment letter), Stonebridge's advisory fees, rating agency fees payable to Keystone Ratings Group and Sentinel Credit Analytics, filing fees, title insurance premiums, survey and appraisal costs, and other customary closing costs. A detailed breakdown of this category will be prepared in connection with the funds flow memorandum.

IV. Key Economic Terms

A. Interest Rate

Applicable Rate: Term SOFR plus 400 basis points per annum. — AGREED.

SOFR Floor: 0.75%. This means that if the Term SOFR rate falls below 0.75%, the SOFR component used for interest calculation purposes will be deemed to be 0.75%. — AGREED.

SOFR Credit Spread Adjustment ("CSA"): 10 basis points for 1-month Term SOFR; 15 basis points for 3-month Term SOFR. The CSA is intended to account for the structural difference between SOFR and the legacy LIBOR benchmark and is consistent with current market convention for institutional term loan facilities. — AGREED.

Default Rate: An additional 200 basis points per annum above the otherwise applicable rate shall apply during the continuance of any event of default. — AGREED.

Estimated All-In Rate (at Current SOFR Levels): For reference, based on the current 1-month Term SOFR rate of approximately 4.35%, the estimated all-in interest rate for the Facility would be calculated as follows:

• 1-month Term SOFR: 4.35%

• Plus CSA: 0.10%

• Adjusted SOFR: 4.45%

• Plus Margin: 4.00%

• Estimated All-In Rate: approximately 8.45%

This rate is a point-in-time estimate and will fluctuate with movements in the underlying SOFR rate. The SOFR floor of 0.75% is not currently relevant given prevailing interest rate levels.

B. OID / Upfront Fee

OID to Lenders: 50 basis points, resulting in an issue price of 99.50 (i.e., lenders fund $99.50 for each $100.00 of face value). The aggregate dollar amount of the OID on the full $1,400,000,000 Facility is $7,000,000. — AGREED.

Upfront Fee (to participating syndicate lenders): 100 basis points (1.00%) payable to lenders participating in the syndication. This fee is per Crescent Harbor's syndication terms and is agreed in principle, subject to the final fee letter. The upfront fee will be set forth in the fee letter and is expected to vary by commitment tier for syndicate lenders. — AGREED in principle (subject to final fee letter).

C. Arrangement Fee

Crescent Harbor Arrangement Fee: 50 basis points on the full Facility amount, calculated as $1,400,000,000 × 0.50% = $7,000,000. This fee is payable to Crescent Harbor in its capacity as sole lead left arranger and bookrunner and is separate from the OID and upfront fees. The arrangement fee will be documented in the fee letter. — AGREED (to be documented in fee letter).

D. Maturity. Maturity Date: Seven (7) years from the closing date. Assuming a closing date of March 28, 2025, the maturity date would be March 28, 2032. The exact maturity date will be set based upon the actual closing date and will be confirmed in the credit agreement. — AGREED.

E. Amortization. Annual Amortization: 1.00% of the original principal amount per annum, payable in equal quarterly installments.

Quarterly Payment Amount: $3,500,000 per quarter ($1,400,000,000 × 1.00% ÷ 4 = $3,500,000).

First Quarterly Amortization Payment: June 30, 2025 (being the first quarterly date following the anticipated closing date).

The remaining principal balance of the Term Loan B will be due and payable in full on the maturity date. At the 1.00% per annum amortization rate, the aggregate scheduled amortization over the seven-year term would be $98,000,000 (representing 7.0% of the original principal amount), with the remaining $1,302,000,000 (93.0% of original principal) due as a bullet payment at maturity.

Status: AGREED.

F. Voluntary Prepayment

The Term Loan B may be prepaid at par at any time, in whole or in part, without premium or penalty, subject to the following:

Soft Call Premium: A prepayment premium of 1.00% (i.e., 101% of the principal amount prepaid) shall apply to any repricing transaction occurring within the first six (6) months after the closing date. A "repricing transaction" for this purpose generally means any prepayment of the Term Loan B funded from the proceeds of a lower-spread replacement facility, or any amendment to the credit agreement that results in a reduction of the applicable margin. This soft call protection is customary in the institutional term loan market and is intended to protect initial lenders from early repricing events.

SOFR Breakage: Standard SOFR breakage indemnification applies. To the extent a prepayment is made on a date other than the last day of an applicable interest period, the Borrower will be required to compensate lenders for any actual breakage costs or losses incurred as a result of such prepayment.

Status: AGREED.

G. Mandatory Prepayments

The term sheet provides for the following mandatory prepayment obligations:

(a) Excess Cash Flow ("ECF") Sweep. The ECF sweep provision requires the Borrower to apply a percentage of Excess Cash Flow to the prepayment of the Term Loan B, with the applicable percentage stepping down based on first lien net leverage levels, as follows:

At the anticipated closing pro forma first lien net leverage of approximately 3.38x, the ECF sweep percentage would initially be 0%. However, this level may change over time as leverage fluctuates, and the deal team should be aware that any increase in first lien net leverage above 3.50x (for example, as a result of an EBITDA decline or a draw under any future revolving facility) would trigger the 25% or 50% sweep levels.

The step-down thresholds have been agreed. The precise definition of "Excess Cash Flow" and the mechanics of the calculation (including deductions for voluntary prepayments, capital expenditures, and certain other items) will need to be confirmed during credit agreement drafting. This remains an open item, as noted in Section XII below.

Status: AGREED on step-down thresholds; definition of "Excess Cash Flow" to be confirmed in credit agreement drafting.

(b) Asset Sales. 100% of net cash proceeds from asset sales and other dispositions of property shall be applied to prepay the Term Loan B, subject to the following:

• Reinvestment Rights: The Borrower shall have 365 days from the date of receipt of net cash proceeds to reinvest such proceeds in assets useful in the business of the Borrower and its restricted subsidiaries. This period is extendable to 545 days if a binding commitment to reinvest is made within the initial 365-day period.

• Annual De Minimis Basket: Net cash proceeds from asset sales in an aggregate amount not exceeding $25,000,000 in any fiscal year shall be excluded from the mandatory prepayment obligation.

Status: AGREED.

(c) Debt Issuances. 100% of net cash proceeds from the issuance of any indebtedness not otherwise permitted under the credit agreement shall be applied to prepay the Term Loan B. This is a customary provision that captures proceeds from non-permitted refinancings and other debt issuances. — AGREED.

(d) Insurance and Condemnation Events. 100% of net cash proceeds received in respect of any insurance claim or condemnation event shall be applied to prepay the Term Loan B, subject to reinvestment rights (consistent with the asset sale reinvestment mechanics described above) and a $10,000,000 threshold below which no prepayment is required. — AGREED.

H. Most Favored Nation ("MFN") Protection

MFN protection is applicable to any incremental term loans incurred within the first twelve (12) months following the closing date. The MFN provision includes a 50 basis point threshold: if any incremental term loan facility is priced at an effective yield (including margin and OID, but excluding SOFR floors) that exceeds the effective yield on the initial Term Loan B by more than 50 basis points, then the applicable margin on the initial Term Loan B shall be automatically increased to the extent necessary to reduce the differential to 50 basis points.

This is a standard market protection for initial lenders against the incurrence of incremental facilities at higher spreads, and is consistent with current market practice.

Status: AGREED.

V. Financial Covenants

A. Springing Financial Covenant

Covenant Type: Maximum first lien net leverage ratio.

Maximum Ratio: 5.00x (5.00 to 1.00).

Testing Mechanics: The financial covenant will be tested on a quarterly basis; however, testing will be triggered only when aggregate outstanding revolving loans under any revolving credit facility (if established via the incremental facility provisions) exceed 40% of aggregate revolving commitments as of the last day of the applicable fiscal quarter. This "springing" mechanism is customary for Term Loan B facilities and reflects the covenant-lite structure that is standard in the institutional loan market.

Applicability. It is important to note that no new revolving credit facility is being established in connection with this transaction. The existing Atlas Meridian revolving credit facility ($190,000,000 commitment, currently undrawn) will be terminated at closing. Accordingly, the springing financial covenant will not be testable at closing and will become relevant only if and when a revolving credit facility is added to the capital structure through the incremental facility provisions of the credit agreement. If such a revolving facility is established, the 40% draw threshold would apply to determine whether the financial covenant is tested in any given quarter.

Current Headroom. Pro forma first lien net leverage at closing is approximately 3.38x, as detailed in Section V.B below. This provides approximately 162 basis points of cushion relative to the 5.00x covenant level. Even in a downside scenario where Adjusted EBITDA were to decline by approximately 32% from current levels (from $385,000,000 to approximately $262,000,000), the Borrower would remain in compliance with the 5.00x covenant, assuming constant first lien net debt levels. However, this analysis is illustrative only, and actual compliance will depend on both the level of net debt and the trailing four-quarter Adjusted EBITDA at each testing date.

Status: AGREED on the 5.00x level and the springing mechanism. Testing mechanics (including the treatment of cash netting, the applicable measurement period, and other details) to be confirmed in the credit agreement.

B. Pro Forma Leverage at Closing

The following table summarizes the anticipated pro forma leverage metrics at closing:

The pro forma cash figure of $100,000,000 reflects the estimated unrestricted cash on hand at closing after giving effect to all transaction payments and the $147,000,000 of cash deposited to the balance sheet from the Facility proceeds. The difference between the $147,000,000 of Facility proceeds allocated to the balance sheet and the $100,000,000 of pro forma cash netted for leverage purposes reflects existing cash usage and working capital needs at or around the closing date, as estimated by Stonebridge.

C. LTM Adjusted EBITDA — Composition

The following table provides a bridge from reported EBITDA to Adjusted EBITDA for the LTM period ended December 31, 2024:

The add-backs total $28,000,000, which represents approximately 7.8% of reported EBITDA. The acquisition-related costs primarily relate to expenses incurred in connection with the Lakeshore Precision Engineering, Inc. acquisition completed in 2024. The non-recurring restructuring charges are attributable to a workforce reduction and manufacturing footprint optimization program undertaken in Q2 and Q3 2024. The sponsor management fees represent the annual management fee payable by Nexford to Granite Peak under the existing management services agreement, which is expected to be terminated or suspended at or following the closing. The integration costs relate to the ongoing integration of the Ridgepoint Specialty Coatings, LLC and Lakeshore acquisitions.

Important Note: The scope of permitted EBITDA add-backs in the credit agreement definition of "Consolidated Adjusted EBITDA" remains subject to negotiation during credit agreement drafting. In particular, the imposition of a cap on add-backs as a percentage of reported EBITDA (commonly a 25% cap in recent market transactions, which would permit up to approximately $89,250,000 in add-backs based on current reported EBITDA levels) is an open discussion point. W&G's first draft of the credit agreement is expected to include a more detailed and expansive definition of Consolidated Adjusted EBITDA, and C&H will need to carefully review the breadth of the add-back categories to ensure consistency with the economics reflected in the term sheet. This item is flagged in Section XII as an open item.

VI. Key Legal Terms — Negative Covenants

The credit agreement is expected to include customary negative covenants for a sponsor-backed Term Loan B transaction. The following summarizes the principal negative covenants based on the term sheet negotiations to date.

A. Limitations on Indebtedness — Permitted Indebtedness

Incremental Facility. The credit agreement will include an incremental facility provision permitting the Borrower to incur additional first lien term loans and/or revolving commitments, subject to the following parameters:

• Free-and-Clear Basket: The greater of (x) $280,000,000 and (y) 100% of LTM Adjusted EBITDA (approximately $385,000,000 at closing). This basket provides the Borrower with meaningful flexibility to incur incremental debt without the need to satisfy a leverage incurrence test. The "grower" formulation (tied to LTM Adjusted EBITDA) means that the basket will increase as the Borrower's earnings grow, which is an important feature for the Sponsor.

• Ratio-Based Incurrence: In addition to the free-and-clear basket, the Borrower may incur unlimited additional incremental indebtedness, subject to pro forma compliance with a maximum first lien net leverage ratio of 4.50x (4.50 to 1.00). This ratio test is tested on a pro forma basis after giving effect to the incurrence of the incremental debt and the application of proceeds therefrom.

• Form: Incremental facilities may take the form of additional pari passu term loans, additional revolving commitments, or a combination thereof.

• Most Favored Nation Protection: As discussed in Section IV.H above, MFN protection applies to incremental term loans incurred within the first 12 months of closing, with a 50 basis point threshold.

• Additional Terms: Specific terms regarding MFN sunsets, inside maturity restrictions (i.e., whether incremental term loans must mature no earlier than the existing Term Loan B), and other customary incremental facility conditions will be addressed during credit agreement drafting.

Status: AGREED on structure; specific terms (e.g., MFN sunsets, inside maturity restrictions, conditions to incurrence) to be confirmed in credit agreement.

Capital Leases / Purchase Money Debt: The credit agreement will include a permitted indebtedness basket for capital lease obligations and purchase money indebtedness in an aggregate amount not to exceed $50,000,000 at any time outstanding. — AGREED.

General Indebtedness Basket: A general basket for unsecured indebtedness in an aggregate amount not to exceed $35,000,000 at any time outstanding. — AGREED.

B. Limitations on Restricted Payments

The restricted payments covenant will limit the ability of the Borrower and its restricted subsidiaries to make dividends, distributions, equity repurchases, and other restricted payments, subject to the following exceptions:

General Annual Basket: Restricted payments of up to $25,000,000 per fiscal year may be made without the need to satisfy any leverage test or other conditions. — AGREED.

Builder Basket: A cumulative builder basket with a starter amount of $50,000,000, plus 50% of cumulative consolidated net income ("CNI") commencing with the first full fiscal quarter after closing (Q1 2025). The builder basket grows over time as the Borrower generates positive CNI and provides a mechanism for returning capital to equity holders based on cumulative profitability. — AGREED in principle. The precise definitions and mechanics of the builder basket, including the definition of CNI and the applicable starting date for the cumulative calculation, remain to be negotiated during credit agreement drafting.

Unlimited Restricted Payment Basket (Ratio Test): Unlimited restricted payments are permitted, subject to pro forma compliance with a maximum total net leverage ratio of 3.75x (3.75 to 1.00) after giving effect to such restricted payment. This threshold provides the Sponsor with the flexibility to extract additional value from the investment through future dividend recapitalizations or other distributions, provided that the overall leverage of the business remains at or below 3.75x total net leverage on a pro forma basis. — AGREED on the 3.75x threshold level.

Status: Structure agreed. Precise builder basket formulation and CNI definition to be confirmed in credit agreement.

C. Limitations on Liens

The credit agreement will include a customary negative pledge covenant prohibiting the Borrower and its restricted subsidiaries from creating, incurring, or permitting to exist any liens on their property or assets, except for customary exceptions including, without limitation, liens securing the obligations under the credit agreement, liens securing permitted indebtedness (including capital leases and purchase money obligations), statutory liens (tax, mechanic's, landlord's, carrier's, warehouseman's, and similar liens), judgment liens not constituting an event of default, liens on property acquired or existing at the time of acquisition, and other customary carve-outs.

Status: AGREED in concept. Detailed lien baskets and exceptions to be negotiated in credit agreement.

D. Limitations on Asset Dispositions

The credit agreement will include customary limitations on the ability of the Borrower and its restricted subsidiaries to sell, transfer, lease, or otherwise dispose of their assets. Asset dispositions will be subject to requirements that (i) dispositions be made at fair market value, (ii) dispositions be on arm's-length terms, and (iii) at least 75% of the consideration received be in the form of cash or cash equivalents (or other forms of consideration deemed to be cash equivalents for this purpose, such as the assumption of liabilities). Asset disposition proceeds will be subject to the mandatory prepayment and reinvestment mechanics described in Section IV.G(b) above.

Status: AGREED in concept. Specific thresholds and mechanics to be addressed in credit agreement.

E. Limitations on Investments

The credit agreement will include customary limitations on investments by the Borrower and its restricted subsidiaries, including restrictions on loans, advances, equity contributions, and acquisitions. The specific permitted investment baskets, including dollar thresholds for general investments, investments in unrestricted subsidiaries, investments in joint ventures, and ratio-based acquisition baskets, will need to be negotiated during credit agreement drafting. This is a common area of significant negotiation in sponsor-backed transactions, as the Sponsor will seek broad flexibility for add-on acquisitions and other investments consistent with Nexford's growth strategy.

Status: OPEN. To be addressed in credit agreement drafting.

F. Limitations on Affiliate Transactions

The credit agreement will include customary limitations on transactions between the Borrower, its restricted subsidiaries, and their affiliates (including the Sponsor and its portfolio companies). Transactions with affiliates above a specified dollar threshold (to be determined) will require board approval and/or a determination that the transaction is on fair market value terms. Customary exceptions will apply for transactions entered into in the ordinary course of business, compensation arrangements approved by the board, and transactions permitted under other covenant baskets (e.g., restricted payments, management fees).

Status: OPEN. The threshold dollar amount and the specific approval mechanics remain to be determined.

G. Limitations on Fundamental Changes

The credit agreement will include a customary prohibition on mergers, consolidations, and sales of all or substantially all assets of the Borrower and its restricted subsidiaries. Exceptions will be provided for permitted acquisitions (subject to the investment covenant), internal reorganizations among the Loan Parties, and other customary carve-outs (e.g., mergers of a restricted subsidiary into the Borrower or another restricted subsidiary, provided that the Borrower or a Loan Party is the surviving entity).

Status: AGREED in concept.

H. Limitations on Restrictive Agreements

The credit agreement will include a customary covenant limiting the ability of the Borrower and its restricted subsidiaries to enter into agreements that restrict the ability of subsidiaries to make dividends, distributions, or other payments to the Borrower or to another restricted subsidiary, or to create liens on their assets in favor of the lenders. Customary exceptions will be provided for restrictions contained in acquisition agreements, leases, agreements governing secured indebtedness (including capital leases and purchase money obligations), and other specified categories.

Status: AGREED in concept.

I. Sanctions / OFAC / Anti-Corruption / Anti-Money Laundering

The credit agreement will include representations, warranties, and covenants relating to compliance with applicable sanctions, anti-corruption, and anti-money laundering laws and regulations, including the following:

• Representations and covenants that no Loan Party, director, officer, employee, or (to the knowledge of the Loan Parties) agent is a Sanctioned Person, as defined in applicable executive orders, regulations, and lists maintained by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, the U.S. Department of State, and other relevant sanctioning authorities.

• A covenant that no proceeds of the Facility will be used, directly or indirectly, in violation of Sanctions, including those administered by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty's Treasury of the United Kingdom.

• Covenants requiring compliance with the USA PATRIOT Act (Title III of Pub. L. 107-56), the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78dd-1 et seq.), and the Bank Secrecy Act of 1970, as amended (31 U.S.C. §§ 5311 et seq.), and the regulations promulgated thereunder.

Status: AGREED. Standard language to be included.

VII. Change of Control Provision

The credit agreement will include a change of control provision. The change of control triggers, as reflected in the current term sheet, are as follows:

(i) The acquisition by any person or "group" (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than Granite Peak and its affiliates (as "permitted holders"), of more than 35% of the total voting equity interests of Holdings.

(ii) Nexford ceasing to be a direct wholly-owned subsidiary of Holdings.

(iii) The occurrence of a "change of control" (or similar event, however denominated) under the Senior Unsecured Notes Indenture dated November 8, 2021, between Nexford, the subsidiary guarantors party thereto, and Pinnacle Trust Company, as trustee. This cross-default trigger ensures that any change of control that would trigger a put right or mandatory offer to purchase under the Senior Unsecured Notes also constitutes a change of control under the credit agreement.

Consequence: Upon the occurrence of a change of control, the Administrative Agent, at the direction of the Required Lenders (i.e., lenders holding more than 50% of the outstanding term loans), may declare all outstanding obligations under the credit agreement immediately due and payable. This is a customary acceleration remedy in change of control provisions.

Status: AGREED in substance. The exact formulation of the "permitted holders" definition remains to be confirmed in the credit agreement. In particular, the scope of "affiliates" of Granite Peak for purposes of the permitted holders definition (e.g., whether other funds managed by the general partner of Granite Peak Capital Partners, LP, co-investors, and management equity holders are included) will be an important negotiation point. We anticipate that the Sponsor's counsel (KB&A) will seek a broad permitted holders definition, while W&G may propose a narrower formulation. This item is flagged as an open item in Section XII below.

VIII. Security and Guarantee Package

A. Guarantors. The obligations of the Borrower under the credit agreement will be guaranteed by the following entities:

Holdings Guarantor: Granite Peak NIH Holdings, LLC, the direct parent of the Borrower and 100% equity holder.

Subsidiary Guarantors: Each existing and future direct and indirect domestic restricted subsidiary of Nexford. Based on the current corporate structure provided by David Engstrom, there are currently eleven (11) entities that will serve as Subsidiary Guarantors:

1. Nexford Precision Components, Inc. — Delaware corporation

2. Nexford Engineered Systems, LLC — Delaware limited liability company

3. Nexford Coatings & Surface Technologies, Inc. — Delaware corporation

4. Nexford Manufacturing Services, LLC — Illinois limited liability company

5. Nexford Properties, LLC — Delaware limited liability company

6. Nexford International Holdings, Inc. — Delaware corporation (CFC holdco; subject to limited pledge, as described in Section VIII.B below)

7. Clearfield Tool & Die, Inc. — Pennsylvania corporation (acquired 2021)

8. Summit Industrial Fabrication Co. — South Carolina corporation (acquired 2022)

9. Ridgepoint Specialty Coatings, LLC — Texas limited liability company (acquired 2023)

10. Lakeshore Precision Engineering, Inc. — Michigan corporation (acquired 2024)

Excluded from Guarantee: The following foreign subsidiaries are excluded from the guarantee requirements:

• Nexford Canada Holdings ULC — British Columbia unlimited liability company

• Nexford Canada Manufacturing, Inc. — Ontario corporation

These entities are excluded because they are organized under the laws of Canadian provinces and are not domestic restricted subsidiaries. The exclusion of foreign subsidiaries from the guarantee package is customary in U.S. leveraged finance transactions to avoid adverse tax consequences (including potential deemed repatriation under Section 956 of the Internal Revenue Code) and the complications and costs associated with obtaining foreign law guarantees and security.

Status: AGREED.

B. Collateral. The obligations under the credit agreement will be secured by a first-priority security interest (subject to customary permitted liens) in substantially all assets of the Borrower and each Guarantor, including the following categories of collateral:

(i) Equity Interests. 100% of the equity interests in each direct domestic subsidiary of the Borrower and the Guarantors. With respect to first-tier foreign subsidiaries, the pledge will be limited to 65% of the voting equity interests and 100% of the non-voting equity interests. This limitation is implemented through the CFC holdco structure, with Nexford International Holdings, Inc. pledging its interests in Nexford Canada Holdings ULC. The 65% limitation on voting equity interests in first-tier foreign subsidiaries is standard to avoid adverse tax consequences under Section 956 of the Internal Revenue Code.

(ii) Accounts Receivable. All accounts receivable of the Borrower and the Guarantors, whether now existing or hereafter arising.

(iii) Inventory. All inventory of the Borrower and the Guarantors, including raw materials, work-in-process, and finished goods.

(iv) Equipment. All equipment of the Borrower and the Guarantors, including manufacturing equipment, machinery, fixtures, and other tangible personal property.

(v) intellectual Property. All intellectual property of the Borrower and the Guarantors, including patents, trademarks, service marks, copyrights, trade names, and licenses relating thereto. A separate intellectual property security agreement will be required to perfect the security interest in registered patents, trademarks, and copyrights with the United States Patent and Trademark Office and the United States Copyright Office, as applicable.

(vi) Deposit Accounts and Securities Accounts. All deposit accounts and securities accounts of the Borrower and the Guarantors. Control agreements will be required with respect to each material deposit account and securities account to perfect the security interest therein under Article 8 and Article 9 of the Uniform Commercial Code.

(vii) General Intangibles. All general intangibles of the Borrower and the Guarantors, including payment intangibles, contract rights, and goodwill.

(viii) Owned Real Property. All owned real property of the Borrower and the Guarantors having a fair market value in excess of $10,000,000 per parcel. Currently, four properties exceed this threshold and will be subject to mortgage liens, as detailed in Section VIII.C below.

(ix) Material Intercompany Notes. All intercompany notes payable to the Borrower or any Guarantor by any other Loan Party or any subsidiary.

(x) Proceeds. All proceeds and products of the foregoing categories of collateral.

Excluded Assets. The following categories of assets will be excluded from the collateral package:

• Motor vehicles with a book value below $250,000 per vehicle (title-certificate assets where the cost of perfection would be disproportionate to the value);

• Letter of credit rights with a face amount under $1,000,000;

• Commercial tort claims with an estimated value under $2,500,000;

• Assets where the cost or burden of pledging would be excessive relative to the benefit afforded to the lenders, as reasonably determined by the Administrative Agent (e.g., certain foreign assets, leaseholds, and assets subject to anti-assignment clauses that cannot be waived or overridden by law).

Status: AGREED in concept. Detailed collateral descriptions, excluded asset categories, and specific dollar thresholds to be confirmed in the security agreement and related collateral documents.

C. Mortgaged Properties

The following owned real properties exceed the $10,000,000 fair market value threshold and will be subject to first-priority mortgage liens:

Appraisals for each of the above properties have been prepared by Greystone Valuation Services, Inc. (Daniel Pritchard, MAI, lead appraiser), and are being reviewed by C&H for completeness and consistency with market standards. Title insurance will be provided by Landmark Title Assurance Company for each mortgaged property.

Mortgage delivery is expected to be structured as a post-closing obligation, with an anticipated deadline of sixty (60) days after the closing date. This approach is customary in large leveraged finance transactions and allows the parties to close the credit facility without delay while finalizing the mortgage documentation, title searches, surveys, and related local law requirements in each applicable jurisdiction. The credit agreement will include a post-closing covenant requiring delivery of the mortgages, title policies, surveys, and environmental reports within the specified timeframe, with failure to satisfy such covenant constituting an event of default if not cured within a customary grace period.

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is prepared in anticipation of litigation and/or to provide legal advice. It is not to be disclosed to any person or entity outside of Calderwood & Harkness LLP without the express written authorization of a responsible partner on this matter.
TO: Claudia Merritt, Responsible Partner Ian Blackwood, Billing Partner
FROM: Marcus Leung, Lead Associate Sophie Tremblay, Working Associate
DATE: February 11, 2025
RE: Nexford Industrial Holdings Inc. — $1,400,000,000 Senior Secured Term Loan B — Summary of Key Economic and Legal Terms
Matter No.: 1005-00001
Client/Matter Code: IBL-NIH-2025-031
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I. Purpose and Background
The purpose of this memorandum is to summarize the key economic and legal terms for the proposed $1,400,000,000 senior secured Term Loan B facility (the "Facility") as reflected in the term sheet negotiations to date. Specifically, the analysis herein is based upon (a) the initial term sheet received on February 5, 2025 from Crescent Harbor Bank, N.A. ("Crescent Harbor"), (b) the Calderwood & Harkness LLP ("C&H") marked version of such term sheet delivered to Whitfield & Gage LLP ("W&G"), counsel to the administrative agent, on February 10, 2025, and (c) various discussions and correspondence with the transaction participants described below. This memorandum identifies which terms are agreed-upon, which remain open or under discussion, and which will require further attention during the credit agreement drafting phase.
Background. Nexford Industrial Holdings Inc. ("Nexford" or the "Borrower") is a Delaware corporation headquartered at 1400 Industrial Parkway, Schaumburg, Illinois 60173. Nexford is a portfolio company of Granite Peak Capital Partners, LP ("Granite Peak" or the "Sponsor"), and is held through Granite Peak NIH Holdings, LLC ("Holdings"), a Delaware limited liability company that serves as the direct parent of and 100% equity holder in Nexford. Granite Peak acquired Nexford in January 2019 through Granite Peak Capital Fund IV, LP for an enterprise value of approximately $1,650,000,000, with an equity investment of approximately $725,000,000. The equity interest in Holdings is held 92% by Granite Peak Capital Fund IV, LP and 8% by GP Fund IV Co-Invest, LP.
Nexford operates as a diversified industrials and specialty manufacturing platform. As of the last twelve months ("LTM") ended December 31, 2024, Nexford reported revenue of approximately $2.1 billion and LTM Adjusted EBITDA of $385,000,000. The business is organized across three operating segments: Precision Components (approximately 52% of revenue), Engineered Systems (approximately 31% of revenue), and Industrial Coatings & Surface Technologies (approximately 17% of revenue). Nexford currently operates 14 manufacturing facilities across North America and employs approximately 8,400 people.
The proposed transaction involves a refinancing of Nexford's existing credit facilities with Atlas Meridian Bank, N.A. ("Atlas Meridian") and a dividend recapitalization to Granite Peak and its co-investors. The existing first lien term loan of $875,000,000 and the existing revolving credit facility with $190,000,000 in commitments (currently undrawn) will each be terminated and refinanced as part of this transaction. In connection with the refinancing, Nexford will distribute approximately $335,000,000 to Holdings, and thence to the equity holders, as a dividend recapitalization. Crescent Harbor will serve as sole lead left arranger, bookrunner, administrative agent, and collateral agent for the Facility.
The commitment letter is expected to be executed on or about February 14, 2025. The fee letter is expected to follow on or about February 18, 2025. These dates remain subject to the finalization of outstanding negotiation points and the satisfaction of certain preliminary conditions.
This memorandum is based upon the term sheet as marked by C&H, as well as discussions with the Nexford deal team, specifically Priya Mehta (Vice President, Treasury) and David Engstrom (General Counsel), and the Granite Peak deal team, specifically Ryan Ostrowski (Principal). We have also drawn upon financial information provided by Stonebridge Advisory Group, LLC ("Stonebridge"), Nexford's financial advisor, and rating agency materials prepared in anticipation of presentations to Keystone Ratings Group and Sentinel Credit Analytics.
II. Transaction Overview
A. Transaction Type
The proposed transaction is a senior secured Term Loan B (institutional term loan) structured as a refinancing of existing credit facilities and a simultaneous dividend recapitalization. The Facility will be marketed and syndicated to institutional lenders in the broadly syndicated loan market through a customary bookbuild process led by Crescent Harbor.
B. Parties. The following sets forth the principal parties to the transaction:
Borrower: Nexford Industrial Holdings Inc., a Delaware corporation, with its principal place of business at 1400 Industrial Parkway, Schaumburg, Illinois 60173.
Holdings Guarantor: Granite Peak NIH Holdings, LLC, a Delaware limited liability company and the direct parent of Nexford, holding 100% of the equity interests in the Borrower.
Sponsor: Granite Peak Capital Partners, LP, acting through the following investment vehicles:
• Granite Peak Capital Fund IV, LP — holding a 92% equity interest in Holdings
• GP Fund IV Co-Invest, LP — holding an 8% equity interest in Holdings
Administrative Agent / Collateral Agent: Crescent Harbor Bank, N.A., a national banking association, with offices at 320 Federal Street, Boston, Massachusetts 02110.
Lead Left Arranger and Bookrunner: Crescent Harbor Bank, N.A.
Joint Lead Arrangers (anticipated): To be determined during the syndication process. The current expectation, based on discussions with the Crescent Harbor syndication desk, is that at least two additional institutions will be brought on as joint lead arrangers to facilitate broad distribution.
Arranger's / Agent's Counsel: Whitfield & Gage LLP. The lead partner for W&G on this engagement is Margaret Ashby.
Borrower's Counsel: Calderwood & Harkness LLP.
Sponsor's Counsel: Kellner Brandt & Associates LLP. The lead partner for KB&A on this engagement is Patricia Voss.
Financial Advisor: Stonebridge Advisory Group, LLC. The Managing Director leading the Stonebridge engagement is Andrew Castellano.
Existing Agent (to be refinanced): Atlas Meridian Bank, N.A., with offices at 500 Liberty Avenue, Pittsburgh, Pennsylvania 15222. The primary contact at Atlas Meridian is Sandra Vickers. The existing credit facilities under Atlas Meridian will be fully repaid and terminated at closing.
Existing Unsecured Notes Trustee: Pinnacle Trust Company, with offices at 101 Park Avenue, New York, New York 10178. Pinnacle Trust Company serves as trustee under the indenture governing the outstanding $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028.
C. Facility Amount
$1,400,000,000. — AGREED.
D. Facility Type
Term Loan B (institutional term loan). — AGREED.
E. Governing Law
State of New York. — AGREED.
F. Anticipated CUSIP / LoanX ID
The anticipated CUSIP number for the Facility is 65432X AA1 and the anticipated LoanX ID is LX-234567. These identifiers are preliminary and subject to confirmation upon the commencement of syndication.
III. Use of Proceeds — Detailed Breakdown
A. Sources. The sole source of funds for the transaction is the Term Loan B Facility:
B. Uses. The proceeds of the Term Loan B will be applied as follows:
Reconciliation: The total uses reconcile as follows: $879,375,000 + $335,000,000 + $38,625,000 + $147,000,000 = $1,400,000,000.
Note Regarding Existing Unsecured Notes. The existing $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 (issued pursuant to the Indenture dated November 8, 2021, with Pinnacle Trust Company serving as trustee) are NOT being refinanced, redeemed, or otherwise repaid in connection with this transaction. These notes will remain outstanding following the closing of the Facility and will continue to be governed by the existing indenture. As discussed in Section IX below, an intercreditor agreement will be executed to address the priority of the first lien secured claims relative to the unsecured claims of the noteholders.
Note on Prior Distributions. Granite Peak and its co-investors previously received a distribution of $275,000,000 from a dividend recapitalization completed in 2021 (which was financed through the incurrence of the Senior Unsecured Notes and the Second Amendment to the existing Atlas Meridian credit facilities). Following the consummation of this transaction, cumulative distributions to Granite Peak and its co-investors will total approximately $610,000,000 against an original equity investment of approximately $725,000,000. This results in a cumulative return of approximately 84% of the original equity investment through distributions alone, prior to any realization event.
C. Fee and Expense Breakdown (Estimated)
The following table sets forth the estimated fees and expenses in connection with the transaction:
The legal, advisory, rating agency, and other expenses category includes C&H's fees and expenses, W&G's fees and expenses (to be reimbursed by the Borrower pursuant to the commitment letter), Stonebridge's advisory fees, rating agency fees payable to Keystone Ratings Group and Sentinel Credit Analytics, filing fees, title insurance premiums, survey and appraisal costs, and other customary closing costs. A detailed breakdown of this category will be prepared in connection with the funds flow memorandum.
IV. Key Economic Terms
A. Interest Rate
Applicable Rate: Term SOFR plus 400 basis points per annum. — AGREED.
SOFR Floor: 0.75%. This means that if the Term SOFR rate falls below 0.75%, the SOFR component used for interest calculation purposes will be deemed to be 0.75%. — AGREED.
SOFR Credit Spread Adjustment ("CSA"): 10 basis points for 1-month Term SOFR; 15 basis points for 3-month Term SOFR. The CSA is intended to account for the structural difference between SOFR and the legacy LIBOR benchmark and is consistent with current market convention for institutional term loan facilities. — AGREED.
Default Rate: An additional 200 basis points per annum above the otherwise applicable rate shall apply during the continuance of any event of default. — AGREED.
Estimated All-In Rate (at Current SOFR Levels): For reference, based on the current 1-month Term SOFR rate of approximately 4.35%, the estimated all-in interest rate for the Facility would be calculated as follows:
• 1-month Term SOFR: 4.35%
• Plus CSA: 0.10%
• Adjusted SOFR: 4.45%
• Plus Margin: 4.00%
• Estimated All-In Rate: approximately 8.45%
This rate is a point-in-time estimate and will fluctuate with movements in the underlying SOFR rate. The SOFR floor of 0.75% is not currently relevant given prevailing interest rate levels.
B. OID / Upfront Fee
OID to Lenders: 50 basis points, resulting in an issue price of 99.50 (i.e., lenders fund $99.50 for each $100.00 of face value). The aggregate dollar amount of the OID on the full $1,400,000,000 Facility is $7,000,000. — AGREED.
Upfront Fee (to participating syndicate lenders): 100 basis points (1.00%) payable to lenders participating in the syndication. This fee is per Crescent Harbor's syndication terms and is agreed in principle, subject to the final fee letter. The upfront fee will be set forth in the fee letter and is expected to vary by commitment tier for syndicate lenders. — AGREED in principle (subject to final fee letter).
C. Arrangement Fee
Crescent Harbor Arrangement Fee: 50 basis points on the full Facility amount, calculated as $1,400,000,000 × 0.50% = $7,000,000. This fee is payable to Crescent Harbor in its capacity as sole lead left arranger and bookrunner and is separate from the OID and upfront fees. The arrangement fee will be documented in the fee letter. — AGREED (to be documented in fee letter).
D. Maturity. Maturity Date: Seven (7) years from the closing date. Assuming a closing date of March 28, 2025, the maturity date would be March 28, 2032. The exact maturity date will be set based upon the actual closing date and will be confirmed in the credit agreement. — AGREED.
E. Amortization. Annual Amortization: 1.00% of the original principal amount per annum, payable in equal quarterly installments.
Quarterly Payment Amount: $3,500,000 per quarter ($1,400,000,000 × 1.00% ÷ 4 = $3,500,000).
First Quarterly Amortization Payment: June 30, 2025 (being the first quarterly date following the anticipated closing date).
The remaining principal balance of the Term Loan B will be due and payable in full on the maturity date. At the 1.00% per annum amortization rate, the aggregate scheduled amortization over the seven-year term would be $98,000,000 (representing 7.0% of the original principal amount), with the remaining $1,302,000,000 (93.0% of original principal) due as a bullet payment at maturity.
Status: AGREED.
F. Voluntary Prepayment
The Term Loan B may be prepaid at par at any time, in whole or in part, without premium or penalty, subject to the following:
Soft Call Premium: A prepayment premium of 1.00% (i.e., 101% of the principal amount prepaid) shall apply to any repricing transaction occurring within the first six (6) months after the closing date. A "repricing transaction" for this purpose generally means any prepayment of the Term Loan B funded from the proceeds of a lower-spread replacement facility, or any amendment to the credit agreement that results in a reduction of the applicable margin. This soft call protection is customary in the institutional term loan market and is intended to protect initial lenders from early repricing events.
SOFR Breakage: Standard SOFR breakage indemnification applies. To the extent a prepayment is made on a date other than the last day of an applicable interest period, the Borrower will be required to compensate lenders for any actual breakage costs or losses incurred as a result of such prepayment.
Status: AGREED.
G. Mandatory Prepayments
The term sheet provides for the following mandatory prepayment obligations:
(a) Excess Cash Flow ("ECF") Sweep. The ECF sweep provision requires the Borrower to apply a percentage of Excess Cash Flow to the prepayment of the Term Loan B, with the applicable percentage stepping down based on first lien net leverage levels, as follows:
At the anticipated closing pro forma first lien net leverage of approximately 3.38x, the ECF sweep percentage would initially be 0%. However, this level may change over time as leverage fluctuates, and the deal team should be aware that any increase in first lien net leverage above 3.50x (for example, as a result of an EBITDA decline or a draw under any future revolving facility) would trigger the 25% or 50% sweep levels.
The step-down thresholds have been agreed. The precise definition of "Excess Cash Flow" and the mechanics of the calculation (including deductions for voluntary prepayments, capital expenditures, and certain other items) will need to be confirmed during credit agreement drafting. This remains an open item, as noted in Section XII below.
Status: AGREED on step-down thresholds; definition of "Excess Cash Flow" to be confirmed in credit agreement drafting.
(b) Asset Sales. 100% of net cash proceeds from asset sales and other dispositions of property shall be applied to prepay the Term Loan B, subject to the following:
• Reinvestment Rights: The Borrower shall have 365 days from the date of receipt of net cash proceeds to reinvest such proceeds in assets useful in the business of the Borrower and its restricted subsidiaries. This period is extendable to 545 days if a binding commitment to reinvest is made within the initial 365-day period.
• Annual De Minimis Basket: Net cash proceeds from asset sales in an aggregate amount not exceeding $25,000,000 in any fiscal year shall be excluded from the mandatory prepayment obligation.
Status: AGREED.
(c) Debt Issuances. 100% of net cash proceeds from the issuance of any indebtedness not otherwise permitted under the credit agreement shall be applied to prepay the Term Loan B. This is a customary provision that captures proceeds from non-permitted refinancings and other debt issuances. — AGREED.
(d) Insurance and Condemnation Events. 100% of net cash proceeds received in respect of any insurance claim or condemnation event shall be applied to prepay the Term Loan B, subject to reinvestment rights (consistent with the asset sale reinvestment mechanics described above) and a $10,000,000 threshold below which no prepayment is required. — AGREED.
H. Most Favored Nation ("MFN") Protection
MFN protection is applicable to any incremental term loans incurred within the first twelve (12) months following the closing date. The MFN provision includes a 50 basis point threshold: if any incremental term loan facility is priced at an effective yield (including margin and OID, but excluding SOFR floors) that exceeds the effective yield on the initial Term Loan B by more than 50 basis points, then the applicable margin on the initial Term Loan B shall be automatically increased to the extent necessary to reduce the differential to 50 basis points.
This is a standard market protection for initial lenders against the incurrence of incremental facilities at higher spreads, and is consistent with current market practice.
Status: AGREED.
V. Financial Covenants
A. Springing Financial Covenant
Covenant Type: Maximum first lien net leverage ratio.
Maximum Ratio: 5.00x (5.00 to 1.00).
Testing Mechanics: The financial covenant will be tested on a quarterly basis; however, testing will be triggered only when aggregate outstanding revolving loans under any revolving credit facility (if established via the incremental facility provisions) exceed 40% of aggregate revolving commitments as of the last day of the applicable fiscal quarter. This "springing" mechanism is customary for Term Loan B facilities and reflects the covenant-lite structure that is standard in the institutional loan market.
Applicability. It is important to note that no new revolving credit facility is being established in connection with this transaction. The existing Atlas Meridian revolving credit facility ($190,000,000 commitment, currently undrawn) will be terminated at closing. Accordingly, the springing financial covenant will not be testable at closing and will become relevant only if and when a revolving credit facility is added to the capital structure through the incremental facility provisions of the credit agreement. If such a revolving facility is established, the 40% draw threshold would apply to determine whether the financial covenant is tested in any given quarter.
Current Headroom. Pro forma first lien net leverage at closing is approximately 3.38x, as detailed in Section V.B below. This provides approximately 162 basis points of cushion relative to the 5.00x covenant level. Even in a downside scenario where Adjusted EBITDA were to decline by approximately 32% from current levels (from $385,000,000 to approximately $262,000,000), the Borrower would remain in compliance with the 5.00x covenant, assuming constant first lien net debt levels. However, this analysis is illustrative only, and actual compliance will depend on both the level of net debt and the trailing four-quarter Adjusted EBITDA at each testing date.
Status: AGREED on the 5.00x level and the springing mechanism. Testing mechanics (including the treatment of cash netting, the applicable measurement period, and other details) to be confirmed in the credit agreement.
B. Pro Forma Leverage at Closing
The following table summarizes the anticipated pro forma leverage metrics at closing:
The pro forma cash figure of $100,000,000 reflects the estimated unrestricted cash on hand at closing after giving effect to all transaction payments and the $147,000,000 of cash deposited to the balance sheet from the Facility proceeds. The difference between the $147,000,000 of Facility proceeds allocated to the balance sheet and the $100,000,000 of pro forma cash netted for leverage purposes reflects existing cash usage and working capital needs at or around the closing date, as estimated by Stonebridge.
C. LTM Adjusted EBITDA — Composition
The following table provides a bridge from reported EBITDA to Adjusted EBITDA for the LTM period ended December 31, 2024:
The add-backs total $28,000,000, which represents approximately 7.8% of reported EBITDA. The acquisition-related costs primarily relate to expenses incurred in connection with the Lakeshore Precision Engineering, Inc. acquisition completed in 2024. The non-recurring restructuring charges are attributable to a workforce reduction and manufacturing footprint optimization program undertaken in Q2 and Q3 2024. The sponsor management fees represent the annual management fee payable by Nexford to Granite Peak under the existing management services agreement, which is expected to be terminated or suspended at or following the closing. The integration costs relate to the ongoing integration of the Ridgepoint Specialty Coatings, LLC and Lakeshore acquisitions.
Important Note: The scope of permitted EBITDA add-backs in the credit agreement definition of "Consolidated Adjusted EBITDA" remains subject to negotiation during credit agreement drafting. In particular, the imposition of a cap on add-backs as a percentage of reported EBITDA (commonly a 25% cap in recent market transactions, which would permit up to approximately $89,250,000 in add-backs based on current reported EBITDA levels) is an open discussion point. W&G's first draft of the credit agreement is expected to include a more detailed and expansive definition of Consolidated Adjusted EBITDA, and C&H will need to carefully review the breadth of the add-back categories to ensure consistency with the economics reflected in the term sheet. This item is flagged in Section XII as an open item.
VI. Key Legal Terms — Negative Covenants
The credit agreement is expected to include customary negative covenants for a sponsor-backed Term Loan B transaction. The following summarizes the principal negative covenants based on the term sheet negotiations to date.
A. Limitations on Indebtedness — Permitted Indebtedness
Incremental Facility. The credit agreement will include an incremental facility provision permitting the Borrower to incur additional first lien term loans and/or revolving commitments, subject to the following parameters:
• Free-and-Clear Basket: The greater of (x) $280,000,000 and (y) 100% of LTM Adjusted EBITDA (approximately $385,000,000 at closing). This basket provides the Borrower with meaningful flexibility to incur incremental debt without the need to satisfy a leverage incurrence test. The "grower" formulation (tied to LTM Adjusted EBITDA) means that the basket will increase as the Borrower's earnings grow, which is an important feature for the Sponsor.
• Ratio-Based Incurrence: In addition to the free-and-clear basket, the Borrower may incur unlimited additional incremental indebtedness, subject to pro forma compliance with a maximum first lien net leverage ratio of 4.50x (4.50 to 1.00). This ratio test is tested on a pro forma basis after giving effect to the incurrence of the incremental debt and the application of proceeds therefrom.
• Form: Incremental facilities may take the form of additional pari passu term loans, additional revolving commitments, or a combination thereof.
• Most Favored Nation Protection: As discussed in Section IV.H above, MFN protection applies to incremental term loans incurred within the first 12 months of closing, with a 50 basis point threshold.
• Additional Terms: Specific terms regarding MFN sunsets, inside maturity restrictions (i.e., whether incremental term loans must mature no earlier than the existing Term Loan B), and other customary incremental facility conditions will be addressed during credit agreement drafting.
Status: AGREED on structure; specific terms (e.g., MFN sunsets, inside maturity restrictions, conditions to incurrence) to be confirmed in credit agreement.
Capital Leases / Purchase Money Debt: The credit agreement will include a permitted indebtedness basket for capital lease obligations and purchase money indebtedness in an aggregate amount not to exceed $50,000,000 at any time outstanding. — AGREED.
General Indebtedness Basket: A general basket for unsecured indebtedness in an aggregate amount not to exceed $35,000,000 at any time outstanding. — AGREED.
B. Limitations on Restricted Payments
The restricted payments covenant will limit the ability of the Borrower and its restricted subsidiaries to make dividends, distributions, equity repurchases, and other restricted payments, subject to the following exceptions:
General Annual Basket: Restricted payments of up to $25,000,000 per fiscal year may be made without the need to satisfy any leverage test or other conditions. — AGREED.
Builder Basket: A cumulative builder basket with a starter amount of $50,000,000, plus 50% of cumulative consolidated net income ("CNI") commencing with the first full fiscal quarter after closing (Q1 2025). The builder basket grows over time as the Borrower generates positive CNI and provides a mechanism for returning capital to equity holders based on cumulative profitability. — AGREED in principle. The precise definitions and mechanics of the builder basket, including the definition of CNI and the applicable starting date for the cumulative calculation, remain to be negotiated during credit agreement drafting.
Unlimited Restricted Payment Basket (Ratio Test): Unlimited restricted payments are permitted, subject to pro forma compliance with a maximum total net leverage ratio of 3.75x (3.75 to 1.00) after giving effect to such restricted payment. This threshold provides the Sponsor with the flexibility to extract additional value from the investment through future dividend recapitalizations or other distributions, provided that the overall leverage of the business remains at or below 3.75x total net leverage on a pro forma basis. — AGREED on the 3.75x threshold level.
Status: Structure agreed. Precise builder basket formulation and CNI definition to be confirmed in credit agreement.
C. Limitations on Liens
The credit agreement will include a customary negative pledge covenant prohibiting the Borrower and its restricted subsidiaries from creating, incurring, or permitting to exist any liens on their property or assets, except for customary exceptions including, without limitation, liens securing the obligations under the credit agreement, liens securing permitted indebtedness (including capital leases and purchase money obligations), statutory liens (tax, mechanic's, landlord's, carrier's, warehouseman's, and similar liens), judgment liens not constituting an event of default, liens on property acquired or existing at the time of acquisition, and other customary carve-outs.
Status: AGREED in concept. Detailed lien baskets and exceptions to be negotiated in credit agreement.
D. Limitations on Asset Dispositions
The credit agreement will include customary limitations on the ability of the Borrower and its restricted subsidiaries to sell, transfer, lease, or otherwise dispose of their assets. Asset dispositions will be subject to requirements that (i) dispositions be made at fair market value, (ii) dispositions be on arm's-length terms, and (iii) at least 75% of the consideration received be in the form of cash or cash equivalents (or other forms of consideration deemed to be cash equivalents for this purpose, such as the assumption of liabilities). Asset disposition proceeds will be subject to the mandatory prepayment and reinvestment mechanics described in Section IV.G(b) above.
Status: AGREED in concept. Specific thresholds and mechanics to be addressed in credit agreement.
E. Limitations on Investments
The credit agreement will include customary limitations on investments by the Borrower and its restricted subsidiaries, including restrictions on loans, advances, equity contributions, and acquisitions. The specific permitted investment baskets, including dollar thresholds for general investments, investments in unrestricted subsidiaries, investments in joint ventures, and ratio-based acquisition baskets, will need to be negotiated during credit agreement drafting. This is a common area of significant negotiation in sponsor-backed transactions, as the Sponsor will seek broad flexibility for add-on acquisitions and other investments consistent with Nexford's growth strategy.
Status: OPEN. To be addressed in credit agreement drafting.
F. Limitations on Affiliate Transactions
The credit agreement will include customary limitations on transactions between the Borrower, its restricted subsidiaries, and their affiliates (including the Sponsor and its portfolio companies). Transactions with affiliates above a specified dollar threshold (to be determined) will require board approval and/or a determination that the transaction is on fair market value terms. Customary exceptions will apply for transactions entered into in the ordinary course of business, compensation arrangements approved by the board, and transactions permitted under other covenant baskets (e.g., restricted payments, management fees).
Status: OPEN. The threshold dollar amount and the specific approval mechanics remain to be determined.
G. Limitations on Fundamental Changes
The credit agreement will include a customary prohibition on mergers, consolidations, and sales of all or substantially all assets of the Borrower and its restricted subsidiaries. Exceptions will be provided for permitted acquisitions (subject to the investment covenant), internal reorganizations among the Loan Parties, and other customary carve-outs (e.g., mergers of a restricted subsidiary into the Borrower or another restricted subsidiary, provided that the Borrower or a Loan Party is the surviving entity).
Status: AGREED in concept.
H. Limitations on Restrictive Agreements
The credit agreement will include a customary covenant limiting the ability of the Borrower and its restricted subsidiaries to enter into agreements that restrict the ability of subsidiaries to make dividends, distributions, or other payments to the Borrower or to another restricted subsidiary, or to create liens on their assets in favor of the lenders. Customary exceptions will be provided for restrictions contained in acquisition agreements, leases, agreements governing secured indebtedness (including capital leases and purchase money obligations), and other specified categories.
Status: AGREED in concept.
I. Sanctions / OFAC / Anti-Corruption / Anti-Money Laundering
The credit agreement will include representations, warranties, and covenants relating to compliance with applicable sanctions, anti-corruption, and anti-money laundering laws and regulations, including the following:
• Representations and covenants that no Loan Party, director, officer, employee, or (to the knowledge of the Loan Parties) agent is a Sanctioned Person, as defined in applicable executive orders, regulations, and lists maintained by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, the U.S. Department of State, and other relevant sanctioning authorities.
• A covenant that no proceeds of the Facility will be used, directly or indirectly, in violation of Sanctions, including those administered by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, or Her Majesty's Treasury of the United Kingdom.
• Covenants requiring compliance with the USA PATRIOT Act (Title III of Pub. L. 107-56), the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78dd-1 et seq.), and the Bank Secrecy Act of 1970, as amended (31 U.S.C. §§ 5311 et seq.), and the regulations promulgated thereunder.
Status: AGREED. Standard language to be included.
VII. Change of Control Provision
The credit agreement will include a change of control provision. The change of control triggers, as reflected in the current term sheet, are as follows:
(i) The acquisition by any person or "group" (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than Granite Peak and its affiliates (as "permitted holders"), of more than 35% of the total voting equity interests of Holdings.
(ii) Nexford ceasing to be a direct wholly-owned subsidiary of Holdings.
(iii) The occurrence of a "change of control" (or similar event, however denominated) under the Senior Unsecured Notes Indenture dated November 8, 2021, between Nexford, the subsidiary guarantors party thereto, and Pinnacle Trust Company, as trustee. This cross-default trigger ensures that any change of control that would trigger a put right or mandatory offer to purchase under the Senior Unsecured Notes also constitutes a change of control under the credit agreement.
Consequence: Upon the occurrence of a change of control, the Administrative Agent, at the direction of the Required Lenders (i.e., lenders holding more than 50% of the outstanding term loans), may declare all outstanding obligations under the credit agreement immediately due and payable. This is a customary acceleration remedy in change of control provisions.
Status: AGREED in substance. The exact formulation of the "permitted holders" definition remains to be confirmed in the credit agreement. In particular, the scope of "affiliates" of Granite Peak for purposes of the permitted holders definition (e.g., whether other funds managed by the general partner of Granite Peak Capital Partners, LP, co-investors, and management equity holders are included) will be an important negotiation point. We anticipate that the Sponsor's counsel (KB&A) will seek a broad permitted holders definition, while W&G may propose a narrower formulation. This item is flagged as an open item in Section XII below.
VIII. Security and Guarantee Package
A. Guarantors. The obligations of the Borrower under the credit agreement will be guaranteed by the following entities:
Holdings Guarantor: Granite Peak NIH Holdings, LLC, the direct parent of the Borrower and 100% equity holder.
Subsidiary Guarantors: Each existing and future direct and indirect domestic restricted subsidiary of Nexford. Based on the current corporate structure provided by David Engstrom, there are currently eleven (11) entities that will serve as Subsidiary Guarantors:
1. Nexford Precision Components, Inc. — Delaware corporation
2. Nexford Engineered Systems, LLC — Delaware limited liability company
3. Nexford Coatings & Surface Technologies, Inc. — Delaware corporation
4. Nexford Manufacturing Services, LLC — Illinois limited liability company
5. Nexford Properties, LLC — Delaware limited liability company
6. Nexford International Holdings, Inc. — Delaware corporation (CFC holdco; subject to limited pledge, as described in Section VIII.B below)
7. Clearfield Tool & Die, Inc. — Pennsylvania corporation (acquired 2021)
8. Summit Industrial Fabrication Co. — South Carolina corporation (acquired 2022)
9. Ridgepoint Specialty Coatings, LLC — Texas limited liability company (acquired 2023)
10. Lakeshore Precision Engineering, Inc. — Michigan corporation (acquired 2024)
Excluded from Guarantee: The following foreign subsidiaries are excluded from the guarantee requirements:
• Nexford Canada Holdings ULC — British Columbia unlimited liability company
• Nexford Canada Manufacturing, Inc. — Ontario corporation
These entities are excluded because they are organized under the laws of Canadian provinces and are not domestic restricted subsidiaries. The exclusion of foreign subsidiaries from the guarantee package is customary in U.S. leveraged finance transactions to avoid adverse tax consequences (including potential deemed repatriation under Section 956 of the Internal Revenue Code) and the complications and costs associated with obtaining foreign law guarantees and security.
Status: AGREED.
B. Collateral. The obligations under the credit agreement will be secured by a first-priority security interest (subject to customary permitted liens) in substantially all assets of the Borrower and each Guarantor, including the following categories of collateral:
(i) Equity Interests. 100% of the equity interests in each direct domestic subsidiary of the Borrower and the Guarantors. With respect to first-tier foreign subsidiaries, the pledge will be limited to 65% of the voting equity interests and 100% of the non-voting equity interests. This limitation is implemented through the CFC holdco structure, with Nexford International Holdings, Inc. pledging its interests in Nexford Canada Holdings ULC. The 65% limitation on voting equity interests in first-tier foreign subsidiaries is standard to avoid adverse tax consequences under Section 956 of the Internal Revenue Code.
(ii) Accounts Receivable. All accounts receivable of the Borrower and the Guarantors, whether now existing or hereafter arising.
(iii) Inventory. All inventory of the Borrower and the Guarantors, including raw materials, work-in-process, and finished goods.
(iv) Equipment. All equipment of the Borrower and the Guarantors, including manufacturing equipment, machinery, fixtures, and other tangible personal property.
(v) intellectual Property. All intellectual property of the Borrower and the Guarantors, including patents, trademarks, service marks, copyrights, trade names, and licenses relating thereto. A separate intellectual property security agreement will be required to perfect the security interest in registered patents, trademarks, and copyrights with the United States Patent and Trademark Office and the United States Copyright Office, as applicable.
(vi) Deposit Accounts and Securities Accounts. All deposit accounts and securities accounts of the Borrower and the Guarantors. Control agreements will be required with respect to each material deposit account and securities account to perfect the security interest therein under Article 8 and Article 9 of the Uniform Commercial Code.
(vii) General Intangibles. All general intangibles of the Borrower and the Guarantors, including payment intangibles, contract rights, and goodwill.
(viii) Owned Real Property. All owned real property of the Borrower and the Guarantors having a fair market value in excess of $10,000,000 per parcel. Currently, four properties exceed this threshold and will be subject to mortgage liens, as detailed in Section VIII.C below.
(ix) Material Intercompany Notes. All intercompany notes payable to the Borrower or any Guarantor by any other Loan Party or any subsidiary.
(x) Proceeds. All proceeds and products of the foregoing categories of collateral.
Excluded Assets. The following categories of assets will be excluded from the collateral package:
• Motor vehicles with a book value below $250,000 per vehicle (title-certificate assets where the cost of perfection would be disproportionate to the value);
• Letter of credit rights with a face amount under $1,000,000;
• Commercial tort claims with an estimated value under $2,500,000;
• Assets where the cost or burden of pledging would be excessive relative to the benefit afforded to the lenders, as reasonably determined by the Administrative Agent (e.g., certain foreign assets, leaseholds, and assets subject to anti-assignment clauses that cannot be waived or overridden by law).
Status: AGREED in concept. Detailed collateral descriptions, excluded asset categories, and specific dollar thresholds to be confirmed in the security agreement and related collateral documents.
C. Mortgaged Properties
The following owned real properties exceed the $10,000,000 fair market value threshold and will be subject to first-priority mortgage liens:
Appraisals for each of the above properties have been prepared by Greystone Valuation Services, Inc. (Daniel Pritchard, MAI, lead appraiser), and are being reviewed by C&H for completeness and consistency with market standards. Title insurance will be provided by Landmark Title Assurance Company for each mortgaged property.
Mortgage delivery is expected to be structured as a post-closing obligation, with an anticipated deadline of sixty (60) days after the closing date. This approach is customary in large leveraged finance transactions and allows the parties to close the credit facility without delay while finalizing the mortgage documentation, title searches, surveys, and related local law requirements in each applicable jurisdiction. The credit agreement will include a post-closing covenant requiring delivery of the mortgages, title policies, surveys, and environmental reports within the specified timeframe, with failure to satisfy such covenant constituting an event of default if not cured within a customary grace period.
Status: AGREED.
D. UCC Filing Jurisdictions
UCC-1 financing statements will be required to be filed in the following jurisdictions to perfect the security interest in personal property collateral:
• Delaware (Secretary of State) — for Nexford Industrial Holdings Inc., Granite Peak NIH Holdings, LLC, Nexford Precision Components, Inc., Nexford Engineered Systems, LLC, Nexford Coatings & Surface Technologies, Inc., Nexford Properties, LLC, and Nexford International Holdings, Inc.
• Illinois (Secretary of State) — for Nexford Manufacturing Services, LLC
• Pennsylvania (Department of State) — for Clearfield Tool & Die, Inc.
• South Carolina (Secretary of State) — for Summit Industrial Fabrication Co.
• Texas (Secretary of State) — for Ridgepoint Specialty Coatings, LLC
• Michigan (Department of State) — for Lakeshore Precision Engineering, Inc.
UCC, intellectual property, tax lien, and judgment lien searches will be conducted in each of the above jurisdictions prior to closing to identify any existing liens or encumbrances on the collateral. All existing UCC-1 financing statements in favor of Atlas Meridian Bank, N.A. (or its designees) will need to be terminated at or following closing by filing UCC-3 termination statements. The payoff letter from Atlas Meridian is expected to include an authorization for C&H to file such termination statements on behalf of Atlas Meridian.
IX. Intercreditor Arrangements
A First Lien/Unsecured Intercreditor Agreement will be entered into between Crescent Harbor Bank, N.A. (in its capacity as first lien collateral agent under the credit agreement) and Pinnacle Trust Company (in its capacity as trustee for the holders of the $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028 issued under the Indenture dated November 8, 2021). The intercreditor agreement will address the priority of first lien secured claims relative to the unsecured claims of the noteholders with respect to the shared collateral, including provisions governing:
• Priority of payment from enforcement action proceeds and other collateral realization events;
• Standstill obligations of the unsecured noteholders with respect to exercising remedies against shared collateral;
• Waivers and subordination of unsecured noteholder claims in bankruptcy proceedings with respect to the collateral;
• The right of the first lien collateral agent to credit bid in any asset sale conducted under Section 363 of the Bankruptcy Code; and
• Related matters customary for first lien/unsecured intercreditor agreements.
In addition, the credit agreement will include customary provisions permitting the Administrative Agent to enter into a First Lien/Second Lien Intercreditor Agreement in the event that second lien indebtedness is incurred by the Borrower in the future. This is a "placeholder" provision that provides structural flexibility for a potential future capital structure change.
Status: AGREED in concept. The intercreditor agreement will be drafted by W&G and reviewed by C&H. We will coordinate with KB&A regarding the Sponsor's perspective on the intercreditor terms.
X. Conditions Precedent to Closing (Summary)
The following is a summary of the anticipated conditions precedent to the closing and initial funding of the Term Loan B, based on the term sheet and customary practice for transactions of this type. The conditions precedent will be set forth in detail in the commitment letter and the credit agreement.
1. Execution and delivery of the Credit Agreement and all ancillary loan documents, including the guarantee agreement, security agreement (personal property), pledge agreements, intellectual property security agreement, and the intercreditor agreement with Pinnacle Trust Company.
2. Delivery of legal opinions, including:
• C&H — New York law enforceability opinion and UCC perfection opinion;
• Hargrove & Whitmore LLP (Robert Kimura) — Illinois law opinion (as to Nexford and Nexford Manufacturing Services, LLC);
• Briarcliff Legal Group PA (Catherine Ellsworth) — Delaware entity opinions (as to each Delaware-organized Loan Party).
3. Officer's certificate, closing certificate, and solvency certificate, each signed by Michelle Kaplan, Chief Financial Officer of the Borrower.
4. Secretary's certificates for the Borrower, Holdings, and each Subsidiary Guarantor, attaching certified copies of incumbency certificates, resolutions, and organizational documents (certificates of incorporation or formation, bylaws or operating agreements, and good standing certificates).
5. Good standing certificates from the Secretary of State (or equivalent) of the jurisdiction of organization and each jurisdiction of qualification for all Loan Parties.
6. Board/manager resolutions of the Borrower (adopted January 13, 2025), Holdings, and each Subsidiary Guarantor authorizing the execution, delivery, and performance of the credit agreement and related loan documents.
7. UCC, intellectual property, tax, and judgment lien search results satisfactory to the Administrative Agent, covering all Loan Parties in all applicable jurisdictions.
8. Filing of UCC-1 financing statements in all applicable jurisdictions (as listed in Section VIII.D above).
9. Payoff of existing Atlas Meridian credit facilities in the aggregate amount of $879,375,000 (consisting of $875,000,000 in outstanding principal and approximately $4,375,000 in accrued and unpaid interest). Delivery of payoff letter and lien release authorization from Atlas Meridian Bank, N.A. (contact: Sandra Vickers).
10. UCC-3 termination statements for all existing Atlas Meridian liens. These may be filed as a post-closing item, provided that the payoff letter includes an irrevocable authorization for C&H to file such terminations.
11. Evidence of insurance coverage compliant with the requirements of the credit agreement, as reviewed by Vantage Risk Advisors, LLC. Insurance carriers: Continental Shield Underwriters, Inc. (property and casualty coverage) and Meridian Specialty Insurance Co. (directors and officers liability coverage).
12. Delivery of real property appraisals prepared by Greystone Valuation Services, Inc. (Daniel Pritchard, MAI) and Phase I Environmental Site Assessment reports prepared by Clearwater Environmental Sciences, Inc. for each mortgaged property.
13. Pro forma compliance certificate demonstrating satisfaction of applicable leverage tests on a pro forma basis after giving effect to the transaction and the application of proceeds.
14. Customary Sanctions/OFAC/anti-corruption certifications from the Borrower and each Guarantor.
15. Rating agency confirmation: Keystone Ratings Group (corporate family rating of B1; facility rating of B1) and Sentinel Credit Analytics (corporate credit rating of B+; facility rating of BB-).
16. KYC/AML documentation for all Loan Parties, including beneficial ownership certifications as required under 31 C.F.R. § 1010.230.
17. Funds flow memorandum agreed by all parties, setting forth the precise wire transfer instructions and the sequencing of all payments to be made on the closing date.
Status: Subject to finalization in the commitment letter and the credit agreement. C&H will review the conditions precedent section of the commitment letter upon receipt (expected February 13–14, 2025) and advise the deal team of any additions, modifications, or concerns.
XI. Key Dates and Anticipated Timeline
The following table sets forth the key dates and milestones for the transaction, including completed items and anticipated future events:
The timeline is aggressive but consistent with the Sponsor's stated objective of closing by end of Q1 2025. We note that the pace of credit agreement negotiation will be a key determinant of whether the late March target is achievable. Early engagement with W&G on the first draft credit agreement and prompt resolution of the open items identified in Section XII will be critical to maintaining the schedule.
XII. Open Items and Next Steps
A. Open Economic / Legal Items Requiring Further Negotiation
The following items remain open or subject to further negotiation during the credit agreement drafting phase:
1. Definition of "Consolidated Adjusted EBITDA" — The precise scope of permitted add-backs in the credit agreement definition of Consolidated Adjusted EBITDA, including whether a cap on add-backs as a percentage of reported EBITDA (e.g., 25%) will be imposed. This is a significant definitional item that affects all leverage-tested provisions in the credit agreement.
2. Definition of "Excess Cash Flow" — The definition of Excess Cash Flow and the related deductions (including deductions for voluntary prepayments, capital expenditures, permitted acquisitions, and other items) need to be negotiated. The breadth of deductions will directly affect the amount of cash flow available for the mandatory prepayment sweep.
3. Investment Covenant Baskets — The specific dollar thresholds for permitted investment baskets (including general investments, investments in unrestricted subsidiaries, investments in joint ventures, and ratio-based acquisition baskets) have not yet been addressed and will require negotiation in the credit agreement.
4. Affiliate Transaction Threshold and Approval Mechanics — The dollar threshold above which affiliate transactions require board approval and/or a fair market value determination has not been specified. The approval mechanics (e.g., whether a majority of disinterested directors must approve, or whether a fairness opinion is required above a higher threshold) also remain to be determined.
5. "Permitted Holders" Definition — The formulation of the "permitted holders" definition in the change of control provision requires further negotiation. Key issues include the treatment of other Granite Peak funds, co-investors, management equity holders, and any future sponsors in a secondary buyout scenario.
6. Builder Basket Mechanics — The precise mechanics for calculating 50% of cumulative consolidated net income under the builder basket component of the restricted payments covenant, including the definition of consolidated net income and the applicable starting date, remain to be confirmed.
7. Scope of Excluded Assets in the Security Agreement — The exact dollar thresholds for excluded assets (motor vehicles, letter of credit rights, commercial tort claims) and the scope of the "excessive cost" exclusion are subject to confirmation during security agreement negotiation.
8. Additional Conditions Precedent — Any additional conditions precedent to be specified in the commitment letter beyond those reflected in the current term sheet. We will review the commitment letter carefully upon receipt for any additional or modified conditions.
B. Near-Term Action Items for C&H
The following sets forth the near-term action items for the C&H deal team:
1. Review and comment on the commitment letter. The commitment letter is expected to be circulated by W&G on or about February 13–14, 2025. C&H should conduct a thorough review of the commitment letter, including the conditions precedent, the "market flex" provisions, the "clear market" provisions, and the syndication-related terms, and provide comments to the deal team within 24–48 hours of receipt.
2. Review and comment on the fee letter. The fee letter is expected to be circulated on or about February 17–18, 2025. C&H should review the fee letter for consistency with the agreed economic terms summarized in this memorandum and advise the client on any discrepancies or additional points of negotiation.
3. Continue due diligence review. C&H should continue the due diligence review of organizational documents, material contracts (including the Granite Peak management services agreement, key customer and supplier agreements, and real property leases), pending and threatened litigation, environmental matters, and insurance coverage. We anticipate that the due diligence review will need to be substantially complete prior to the distribution of the first draft credit agreement.
4. Coordinate with local counsel on opinion scope. C&H should coordinate with Hargrove & Whitmore LLP (Robert Kimura) regarding the scope of the Illinois law opinion and with Briarcliff Legal Group PA (Catherine Ellsworth) regarding the scope of the Delaware entity opinions. Draft opinion forms should be circulated to W&G for review as early as practicable.
5. Prepare for first draft credit agreement review. W&G is expected to circulate the first draft of the credit agreement in late February 2025. C&H should be prepared to review and provide a comprehensive markup within the timeframe agreed upon with the deal team. Given the number of open items, the initial credit agreement review is expected to be a significant workstream.
6. Coordinate on tax analysis. C&H should coordinate with Sylvia Hartwell on the tax analysis of the dividend recapitalization structure, including any implications under Section 163(j) of the Internal Revenue Code (business interest deduction limitation), the treatment of the OID for tax purposes, and any other tax issues arising from the transaction structure.
7. Begin preparation of security, guarantee, and pledge document forms. C&H should begin preparing the initial drafts or forms of the guarantee agreement, security agreement, pledge agreement, and intellectual property security agreement. While these documents are frequently provided by agent's counsel, the borrower's counsel's early preparation of forms can accelerate the closing timeline and provide greater control over the documentation terms.
XIII. Existing Capital Structure Summary (Pre-Transaction)
The following table summarizes Nexford's existing capital structure prior to the consummation of the proposed transaction:
The existing Atlas Meridian credit facilities are governed by that certain Credit Agreement dated June 14, 2019, among Nexford Industrial Holdings Inc., as Borrower, Granite Peak NIH Holdings, LLC, as Holdings, the subsidiary guarantors party thereto, Atlas Meridian Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders from time to time party thereto, as amended by the following amendments:
• First Amendment dated March 20, 2020 — provided a COVID-related covenant waiver and certain definitional adjustments;
• Second Amendment dated November 8, 2021 — permitted the incurrence of the Senior Unsecured Notes and the 2021 dividend recapitalization of $275,000,000;
• Third Amendment dated April 15, 2023 — implemented SOFR transition from LIBOR and made certain other technical amendments; and
• Fourth Amendment dated September 12, 2024 — waived the prepayment premium that would otherwise have applied to prepayments of the term loan prior to June 2025.
The Fourth Amendment is of particular relevance to this transaction, as it eliminated the prepayment premium that would have otherwise been payable in connection with the refinancing. The waiver was obtained as part of discussions between Nexford and Atlas Meridian in anticipation of the current refinancing, and no additional consideration was paid for the waiver beyond the payment of customary amendment fees.
XIV. Key Financial Metrics Summary (LTM December 31, 2024)
The following table summarizes the key financial metrics for Nexford on an LTM basis as of December 31, 2024:
The estimated pro forma Year 1 cash interest expense of approximately $117,700,000 is calculated based on an average outstanding principal balance of approximately $1,393,000,000 (reflecting the scheduled amortization of $14,000,000 during the first year, with an assumed midpoint average balance) at the estimated all-in rate of approximately 8.45% (as derived in Section IV.A above). The resulting cash interest coverage ratio of approximately 2.61x (calculated as ($385,000,000 – $78,000,000) ÷ $117,700,000) provides a measure of the Borrower's ability to service its debt obligations from operating cash flow after maintenance capital expenditures. While adequate, this coverage level is sensitive to changes in interest rates and EBITDA performance, and should be monitored as part of the ongoing credit analysis.
XV. Distribution / Circulation
This memorandum is prepared for internal use only within Calderwood & Harkness LLP and is not intended for distribution to the client, counterparties, or any third party.
Circulation is limited to the following individuals:
• Claudia Merritt — Responsible Partner
• Ian Blackwood — Billing Partner
• Marcus Leung — Lead Associate
• Sophie Tremblay — Working Associate
• Sylvia Hartwell — Tax Counsel
This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It should not be distributed to the client (Nexford Industrial Holdings Inc.), the Sponsor (Granite Peak Capital Partners, LP), the administrative agent (Crescent Harbor Bank, N.A.), agent's counsel (Whitfield & Gage LLP), sponsor's counsel (Kellner Brandt & Associates LLP), or any other third party without the express prior written authorization of the responsible partner on this matter.
Prepared by Marcus Leung and Sophie Tremblay. Please direct any questions or comments to Marcus Leung at extension 4271 or mleung@calderwoodharkness.com.
Source | Amount
Term Loan B | $1,400,000,000
Total Sources | $1,400,000,000
Use | Amount | Status
Refinance existing first lien term loan (Atlas Meridian Bank, N.A.) | $879,375,000 ($875,000,000 principal + approximately $4,375,000 accrued interest) | AGREED
Terminate existing revolving credit facility (Atlas Meridian Bank, N.A.; $190,000,000 commitment; $0 drawn) | $0 (undrawn; commitment to be terminated) | AGREED
Dividend distribution to Granite Peak NIH Holdings, LLC (and thence to equity holders of Holdings) | ~$335,000,000 | AGREED
Transaction fees and expenses (arrangement fees, OID, legal, advisory, rating agency, and other expenses) | ~$38,625,000 | AGREED (subject to final tally)
Cash to balance sheet | $147,000,000 | AGREED
Total Uses | $1,400,000,000
Item | Amount
Arrangement fee (Crescent Harbor; 50 bps on $1,400,000,000) | $7,000,000
OID / upfront discount (50 bps; issue price 99.50) | $7,000,000
Legal, advisory, rating agency, and other expenses | ~$24,625,000
Total estimated fees and expenses | ~$38,625,000
First Lien Net Leverage Ratio | ECF Sweep Percentage
Greater than 4.25x | 50%
Greater than 3.50x but less than or equal to 4.25x | 25%
Less than or equal to 3.50x | 0%
Metric | Calculation | Result
Pro forma first lien net leverage | ($1,400,000,000 – $100,000,000 pro forma cash) ÷ $385,000,000 LTM Adjusted EBITDA | 3.38x
Pro forma total net leverage (including $250,000,000 Senior Unsecured Notes) | ($1,400,000,000 +

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