LIMITED PLEDGE AGREEMENT
Dated as of March 28, 2025
by
NEXFORD INTERNATIONAL HOLDINGS, INC.
as Pledgor
in favor of
CRESCENT HARBOR BANK, N.A.
as Collateral Agent for the benefit of the Secured Parties
________________________________________
Subject Equity Interests:
65% of the Issued and Outstanding Voting Equity Interests and 100% of the Issued and Outstanding Non-Voting Equity Interests
of
NEXFORD CANADA HOLDINGS ULC
an unlimited liability company organized under the laws of the Province of British Columbia, Canada
________________________________________
Reference is made to that certain Credit Agreement dated as of March 28, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Nexford Industrial Holdings Inc., a Delaware corporation (the "Borrower"), the Guarantors party thereto, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent, Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers, and the Lenders party thereto, governing a $1,400,000,000 Senior Secured Term Loan B Facility.
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This LIMITED PLEDGE AGREEMENT (as amended, restated, supplemented, or otherwise modified from time to time, this "Agreement") is entered into as of March 28, 2025, by and between:
NEXFORD INTERNATIONAL HOLDINGS, INC., a corporation duly organized and existing under the laws of the State of Delaware (the "Pledgor" or "CFC Holdco"), having its registered address at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801;
and
CRESCENT HARBOR BANK, N.A., a national banking association organized under the laws of the United States, acting in its capacity as Collateral Agent for the benefit of the Secured Parties (as defined below) (in such capacity, together with its successors and assigns, the "Collateral Agent"), having its principal office at 320 Federal Street, Boston, Massachusetts 02110.
RECITALS
A. Reference is made to that certain Credit Agreement dated as of March 28, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among Nexford Industrial Holdings Inc., a Delaware corporation (the "Borrower"), the Guarantors party thereto from time to time, Crescent Harbor Bank, N.A., as Administrative Agent and as Collateral Agent, Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, and the several banks, financial institutions, and other entities from time to time party thereto as Lenders, pursuant to which the Lenders have agreed to make available to the Borrower a senior secured first lien term loan facility in an aggregate principal amount of One Billion Four Hundred Million Dollars ($1,400,000,000) (the "Term Loan B Facility"). The proceeds of the Term Loan B Facility are being used on the date hereof to (i) refinance and repay in full the existing first lien term loan in an aggregate principal amount of Eight Hundred Seventy-Five Million Dollars ($875,000,000) and the existing revolving credit facility in an aggregate commitment amount of One Hundred Ninety Million Dollars ($190,000,000), in each case held by Atlas Meridian Bank, N.A. as administrative agent (collectively, the "Existing Credit Facilities"), with an aggregate payoff amount of approximately Eight Hundred Seventy-Nine Million Three Hundred Seventy-Five Thousand Dollars ($879,375,000), inclusive of accrued and unpaid interest, breakage costs, and other amounts owing thereunder, (ii) fund an approximately Three Hundred Thirty-Five Million Dollar ($335,000,000) dividend recapitalization distribution to Granite Peak NIH Holdings, LLC (and thence to Granite Peak Capital Partners, LP and its co-investors), and (iii) pay transaction fees and expenses of approximately Thirty-Eight Million Six Hundred Twenty-Five Thousand Dollars ($38,625,000). The Term Loan B Facility matures on March 28, 2032.
B. The Credit Agreement requires the Pledgor, as a Subsidiary Guarantor and as a CFC Holdco (as defined in the Credit Agreement), to execute and deliver this Limited Pledge Agreement as a condition precedent to the initial extensions of credit under the Credit Agreement, in connection with (i) the Guarantee Agreement dated as of March 28, 2025 (the "Guarantee Agreement"), among the Guarantors party thereto and the Collateral Agent, pursuant to which the Pledgor has unconditionally guaranteed the Obligations, and (ii) the Security Agreement dated as of March 28, 2025 (the "Security Agreement"), among the Borrower, the Guarantors party thereto, and the Collateral Agent, pursuant to which the Pledgor and the other Grantors have granted security interests in substantially all of their personal property assets to secure the Obligations. The Pledgor is a direct, wholly-owned subsidiary of Nexford Industrial Holdings Inc. and is the direct parent of Nexford Canada Holdings ULC (as defined below).
C. The Pledgor is the sole shareholder and sole record and beneficial owner of all of the issued and outstanding equity interests of Nexford Canada Holdings ULC, an unlimited liability company duly organized and validly existing under the Business Corporations Act (British Columbia) (the "BCBCA"), with its principal office located at 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia V6E 4N7, Canada (the "Pledged Entity" or "NCH ULC"). NCH ULC is a "controlled foreign corporation" within the meaning of Section 957 of the Internal Revenue Code of 1986, as amended (the "Code"), and accordingly, in order to avoid a deemed dividend or other adverse United States federal income tax consequences to the Borrower, the Pledgor, or their affiliates under Sections 956 and 1248 of the Code and the Treasury Regulations promulgated thereunder, the pledge of equity interests in NCH ULC is limited to sixty-five percent (65%) of the issued and outstanding voting equity interests and one hundred percent (100%) of the issued and outstanding non-voting equity interests of NCH ULC, in each case as further described herein and in the Credit Agreement. NCH ULC is the direct parent of Nexford Canada Manufacturing, Inc., an Ontario corporation with its principal office at 400 Industrial Road, Mississauga, Ontario L5T 2R3, Canada ("NCM"). NCM is a foreign subsidiary of the Borrower and is not a Guarantor under the Guarantee Agreement.
D. The Pledgor is executing and delivering this Limited Pledge Agreement as a condition precedent to the initial extensions of credit under the Credit Agreement, and the Pledgor acknowledges that it will derive substantial direct and indirect benefit from the making of such extensions of credit to the Borrower, including without limitation the benefit of the refinancing of the Existing Credit Facilities and the resulting reduction in borrowing costs, the availability of capital to maintain and expand the operations of the Borrower and its subsidiaries (including the Pledged Entity and its subsidiaries), and the enhancement of the overall financial position and creditworthiness of the Borrower and its consolidated group.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Administrative Agent" means Crescent Harbor Bank, N.A., a national banking association, in its capacity as administrative agent under the Credit Agreement, and its successors and assigns in such capacity. The Administrative Agent's address for purposes of notices and other communications is 320 Federal Street, Boston, Massachusetts 02110, Attention: Leveraged Finance Administration.
"Agreement" means this Limited Pledge Agreement, as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Borrower" means Nexford Industrial Holdings Inc., a corporation duly organized and existing under the laws of the State of Delaware, with employer identification number 36-4178552, Delaware Secretary of State File Number 5765432, and its principal executive offices located at 1400 Industrial Parkway, Schaumburg, Illinois 60173. The Borrower's registered agent is c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto.
"Collateral Agent" means Crescent Harbor Bank, N.A., a national banking association, in its capacity as collateral agent for the benefit of the Secured Parties under the Credit Agreement and the Security Documents, and its successors and assigns in such capacity.
"Credit Agreement" has the meaning set forth in the recitals hereto. The Credit Agreement is governed by the laws of the State of New York.
"Event of Default" has the meaning assigned to such term in the Credit Agreement.
"Guarantee Agreement" means the Guarantee Agreement dated as of March 28, 2025, among the Guarantors party thereto and the Collateral Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Intercreditor Agreement" means the First Lien/Unsecured Intercreditor Agreement dated as of March 28, 2025, among Crescent Harbor Bank, N.A. as First Lien Collateral Agent, Pinnacle Trust Company as Unsecured Notes Trustee (as trustee for the $250,000,000 7.250% Senior Unsecured Notes due 2028 issued by the Borrower), and the Borrower, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lenders" means the several banks, financial institutions, and other entities from time to time party to the Credit Agreement as lenders, and their respective successors and assigns.
"Loan Documents" has the meaning assigned to such term in the Credit Agreement.
"Non-Voting Equity Interests" means all issued and outstanding shares or equity interests of the Pledged Entity that do not have ordinary voting rights for the election of directors, managers, or an equivalent governing body, including without limitation any non-voting common shares, non-voting preferred shares, or other equity interests designated as "non-voting" under the organizational documents of the Pledged Entity.
"Obligations" has the meaning assigned to such term in the Credit Agreement and includes, without limitation, all principal, interest (including interest at the rate per annum equal to Term SOFR plus 400 basis points, with a SOFR floor of 0.75%, and including post-petition interest at the default rate), fees, expenses, indemnification amounts, and all other amounts owing by the Borrower and the Guarantors (including the Pledgor) under the Credit Agreement and the other Loan Documents, in each case whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses, or otherwise.
"Pledge" has the meaning set forth in Section 2.01 hereof.
"Pledged Entity" or "NCH ULC" means Nexford Canada Holdings ULC, an unlimited liability company duly organized and validly existing under the Business Corporations Act (British Columbia), Canada, with its principal office at 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia V6E 4N7, Canada.
"Pledged Equity Interests" means, collectively, the Pledged Voting Equity Interests and the Pledged Non-Voting Equity Interests, together with all Proceeds thereof, and all additional equity interests, warrants, options, rights, or other securities from time to time acquired by the Pledgor in respect of or in exchange for any of the foregoing, to the extent pledged hereunder.
"Pledged Non-Voting Equity Interests" means one hundred percent (100%) of all issued and outstanding Non-Voting Equity Interests in the Pledged Entity owned by the Pledgor, as more particularly described on Schedule I hereto, as such Schedule I may be supplemented from time to time.
"Pledged Voting Equity Interests" means sixty-five percent (65%) of all issued and outstanding Voting Equity Interests in the Pledged Entity owned by the Pledgor, and no more, as more particularly described on Schedule I hereto, as such Schedule I may be supplemented from time to time. For the avoidance of doubt, the remaining thirty-five percent (35%) of the issued and outstanding Voting Equity Interests in the Pledged Entity are expressly excluded from the Pledged Equity Interests and are not subject to the security interest granted hereunder.
"Pledgor" means Nexford International Holdings, Inc., a corporation duly organized and existing under the laws of the State of Delaware, with its registered address at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801.
"Proceeds" has the meaning assigned to such term in Article 9 of the UCC, and includes, without limitation, all dividends (whether in cash, securities, or other property), distributions (whether in cash, securities, or other property, and whether ordinary, extraordinary, or liquidating), returns of capital, interest, and all other amounts from time to time paid or payable, or otherwise distributed, in respect of or in exchange for any or all of the Pledged Equity Interests.
"Required Lenders" has the meaning assigned to such term in the Credit Agreement.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, and each Lender, in each case under the Credit Agreement, and their respective successors and assigns.
"Security Agreement" means the Security Agreement dated as of March 28, 2025, among the Borrower, the Guarantors party thereto, and the Collateral Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Security Documents" has the meaning assigned to such term in the Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York, or, where applicable, the Uniform Commercial Code as in effect from time to time in the State of Delaware or any other relevant jurisdiction; provided that if, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, the Collateral Agent's security interest in any item or portion of the Pledged Equity Interests is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, priority, or remedies and for purposes of definitions relating to such provisions.
"Voting Equity Interests" means all issued and outstanding shares or equity interests of the Pledged Entity that have ordinary voting rights for the election of directors, managers, or an equivalent governing body, including without limitation any voting common shares or other equity interests designated as "voting" under the organizational documents of the Pledged Entity.
Section 1.02 — Interpretation and Other Definitional Provisions
(a) Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Credit Agreement.
(b) All references herein to Articles, Sections, Schedules, and Exhibits are to Articles, Sections, Schedules, and Exhibits of this Agreement unless otherwise specified.
(c) Words importing the singular number shall include the plural and vice versa. Words importing any gender include all genders. The word "including" (and with correlative meaning, "include" and "includes") means including, without limiting the generality of any description preceding such term.
(d) Unless the context otherwise requires, any reference herein to any agreement, instrument, or document (including this Agreement) shall be construed as referring to such agreement, instrument, or document as from time to time amended, restated, supplemented, or otherwise modified.
(e) The laws of the State of New York shall govern the interpretation of this Agreement, except that (i) the internal corporate affairs of the Pledgor shall be governed by the General Corporation Law of the State of Delaware, and (ii) the internal corporate affairs of the Pledged Entity shall be governed by the Business Corporations Act (British Columbia) and the laws of the Province of British Columbia and the federal laws of Canada applicable therein.
(f) References to any statute, rule, or regulation shall mean such statute, rule, or regulation as from time to time amended, modified, supplemented, or replaced, and shall include any rules and regulations promulgated thereunder.
Section 1.03 — UCC Terms
Terms defined in the UCC (including Article 8 and Article 9 thereof, as applicable) that are not otherwise defined in this Agreement shall have the meanings given in the UCC. Without limiting the foregoing, the terms "authenticate," "certificated security," "control," "entitlement holder," "financial asset," "investment property," "proceeds," "securities account," "securities intermediary," "security," "security entitlement," and "uncertificated security" shall have the respective meanings assigned to such terms in the UCC.
ARTICLE II — PLEDGE AND GRANT OF SECURITY INTEREST
Section 2.01 — Grant of Pledge and Security Interest
As security for the prompt and complete payment and performance when due (whether at stated maturity, by required prepayment, declaration, acceleration, demand, or otherwise) of the Obligations, the Pledgor hereby pledges, assigns, hypothecates, and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a first-priority continuing security interest in and lien upon all of the Pledgor's right, title, and interest in, to, and under the following property, whether now owned or hereafter acquired and wherever located (collectively, the "Pledge"):
(a) sixty-five percent (65%) of all issued and outstanding Voting Equity Interests of Nexford Canada Holdings ULC (the "Pledged Voting Equity Interests"), as more particularly described on Schedule I attached hereto;
(b) one hundred percent (100%) of all issued and outstanding Non-Voting Equity Interests of Nexford Canada Holdings ULC (the "Pledged Non-Voting Equity Interests"), as more particularly described on Schedule I attached hereto;
(c) all certificates, instruments, or other documents at any time representing or evidencing any of the foregoing Pledged Voting Equity Interests or Pledged Non-Voting Equity Interests;
(d) all dividends, distributions (whether in cash, securities, or other property), interest, and all other payments and rights from time to time received, receivable, or otherwise distributed in respect of, in exchange for, or on account of any of the Pledged Equity Interests;
(e) all additional equity interests, warrants, options, subscription rights, preemptive rights, or other securities of the Pledged Entity from time to time acquired by the Pledgor in respect of, in exchange for, or in substitution for any of the Pledged Equity Interests (subject at all times to the limitation set forth in Section 2.03); and
(f) all Proceeds of any and all of the foregoing, in whatever form.
Section 2.02 — Secured Obligations
The Pledge and the security interest granted hereunder secure the prompt and complete payment and performance of all Obligations of the Borrower and the Guarantors (including the Pledgor, in its capacity as a Guarantor under the Guarantee Agreement) under the Credit Agreement, the Guarantee Agreement, and all other Loan Documents, whether now existing or hereafter arising. Without limiting the generality of the foregoing, the Obligations secured by this Agreement include:
(i) all principal of and interest on the Term Loan B Facility (including post-petition interest accruing at the default rate, which is equal to the otherwise applicable interest rate plus two hundred (200) basis points per annum, whether or not such post-petition interest is an allowed claim in any proceeding under any Debtor Relief Law);
(ii) all fees, premiums, commissions, expenses, and indemnification amounts payable under the Credit Agreement and the other Loan Documents, including without limitation the administrative agent fee, the upfront fees payable to the Joint Lead Arrangers, and all reimbursement obligations; and
(iii) all other amounts of every nature and description owing by the Borrower or any Guarantor (including the Pledgor) to any Secured Party under the Credit Agreement and the other Loan Documents, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, and howsoever evidenced, held, or acquired.
Section 2.03 — Limitation on Pledge — CFC/Tax Considerations
(a) Notwithstanding anything herein to the contrary, the Pledgor shall not pledge, and the Collateral Agent shall not have a security interest in or lien upon, more than sixty-five percent (65%) of the issued and outstanding Voting Equity Interests in the Pledged Entity at any time. The remaining thirty-five percent (35%) of the issued and outstanding Voting Equity Interests in the Pledged Entity are expressly excluded from the Pledge and are not subject to the security interest created hereunder.
(b) The limitation set forth in this Section 2.03 is intended to prevent a deemed dividend or other adverse United States federal income tax consequences to the Borrower, the Pledgor, or any of their respective affiliates under Sections 956 and 1248 of the Code and the Treasury Regulations promulgated thereunder. This limitation shall be interpreted in a manner consistent with the corresponding provisions of the Credit Agreement and the Security Agreement.
(c) If at any time after the date hereof the Pledged Entity issues additional Voting Equity Interests to the Pledgor (whether by way of stock dividend, stock split, issuance upon exercise of warrants or options, or otherwise), the Pledgor shall, promptly and in any event within ten (10) Business Days of such issuance, pledge to the Collateral Agent such additional Voting Equity Interests as shall be necessary to ensure that the Collateral Agent holds a first-priority perfected security interest in not less than sixty-five percent (65%) and not more than sixty-five percent (65%) of the aggregate issued and outstanding Voting Equity Interests of the Pledged Entity (to the extent such pledge would not cause adverse tax consequences under the Code). The Pledgor shall deliver to the Collateral Agent certificates (if any) representing such additional Voting Equity Interests, together with duly executed stock powers or transfer instruments endorsed in blank, and shall execute and deliver such supplements, amendments, and other documents as the Collateral Agent may reasonably request to evidence and perfect the security interest in such additional Voting Equity Interests.
(d) One hundred percent (100%) of all issued and outstanding Non-Voting Equity Interests of the Pledged Entity shall remain subject to the Pledge at all times, regardless of any additional issuances of Non-Voting Equity Interests. If the Pledged Entity issues additional Non-Voting Equity Interests to the Pledgor, the Pledgor shall promptly pledge one hundred percent (100%) of such additional Non-Voting Equity Interests to the Collateral Agent in the manner set forth in Section 4.06 hereof.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR
The Pledgor hereby represents and warrants to the Collateral Agent and each of the Secured Parties as follows, as of the date hereof and as of each date on which such representations and warranties are deemed to be made or repeated under the Credit Agreement:
Section 3.01 — Organization and Good Standing
The Pledgor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Pledgor has all requisite corporate power and authority to own, lease, and operate its properties and to conduct its business as now conducted. The Pledgor has been issued a certificate of good standing by the Secretary of State of the State of Delaware dated within five (5) Business Days of March 28, 2025, a copy of which has been delivered to the Collateral Agent. The Pledgor is duly qualified and authorized to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.
Section 3.02 — Due Authorization; No Conflict
(a) The execution, delivery, and performance by the Pledgor of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Pledgor, including the adoption of resolutions by the Board of Directors of the Pledgor, which resolutions have been duly certified by the Secretary or an Assistant Secretary of the Pledgor as of March 28, 2025 and copies of which have been delivered to the Collateral Agent as part of the closing deliverables.
(b) The execution, delivery, and performance of this Agreement by the Pledgor do not and will not (i) violate any provision of the certificate of incorporation, bylaws, or other organizational documents of the Pledgor, (ii) violate any law, statute, rule, regulation, order, writ, judgment, injunction, or decree of any governmental authority applicable to the Pledgor or any of its properties or assets, (iii) result in a breach of, constitute a default under, or give rise to any right of termination, amendment, acceleration, or cancellation under any agreement, contract, indenture, mortgage, or other instrument to which the Pledgor is a party or by which the Pledgor or any of its properties or assets may be bound, or (iv) result in the creation or imposition of any lien on any property or asset of the Pledgor (other than the security interest created hereunder and the liens permitted under the Credit Agreement).
Section 3.03 — Enforceability
This Agreement constitutes the legal, valid, and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, subject to (a) the effects of bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent transfer, or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, and (b) general principles of equity (whether considered in a proceeding in equity or at law), including concepts of materiality, reasonableness, good faith, and fair dealing.
Section 3.04 — Ownership and Title
(a) The Pledgor is the sole record and beneficial owner of the Pledged Equity Interests, free and clear of all liens, claims, charges, encumbrances, security interests, options, warrants, rights of first refusal, or other restrictions or limitations of any nature whatsoever, other than (i) the security interest created in favor of the Collateral Agent pursuant to this Agreement, and (ii) liens and encumbrances expressly permitted under the Credit Agreement (the "Permitted Liens").
(b) The Pledged Equity Interests constitute the percentages of the total issued and outstanding equity interests of the Pledged Entity as set forth on Schedule I hereto. Schedule I accurately and completely describes, as of the date hereof, the class, series, certificate numbers (if applicable), and number of shares or units of the Pledged Equity Interests, and the percentage of the total issued and outstanding voting and non-voting equity interests of the Pledged Entity represented thereby.
(c) The Pledgor has good and marketable title to the Pledged Equity Interests, with full right and authority to pledge the same hereunder, and no person other than the Pledgor has any right, title, claim, or interest in or to any of the Pledged Equity Interests (other than the Collateral Agent as secured party hereunder).
Section 3.05 — Description of Pledged Entity
(a) Nexford Canada Holdings ULC is an unlimited liability company duly organized and validly existing under the Business Corporations Act (British Columbia), Canada. The Pledged Entity is in good standing under the laws of British Columbia (to the extent that such concept is applicable under British Columbia law) and has all requisite corporate power and authority to own, lease, and operate its properties and to conduct its business as now conducted.
(b) The principal office of the Pledged Entity is located at 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia V6E 4N7, Canada.
(c) The Pledged Entity is a first-tier foreign subsidiary of the Pledgor. The Pledgor is the sole shareholder of the Pledged Entity and owns one hundred percent (100%) of all issued and outstanding equity interests of the Pledged Entity.
(d) The Pledged Entity is a "controlled foreign corporation" within the meaning of Section 957 of the Code. The Pledgor is a "United States shareholder" of the Pledged Entity within the meaning of Section 951(b) of the Code.
(e) The Pledged Entity is the direct parent of Nexford Canada Manufacturing, Inc. ("NCM"), a corporation organized under the laws of the Province of Ontario, Canada, with its principal office at 400 Industrial Road, Mississauga, Ontario L5T 2R3, Canada. NCM is a foreign subsidiary of the Borrower and is not a Guarantor under the Guarantee Agreement or a grantor under the Security Agreement.
Section 3.06 — No Prior Pledges or Encumbrances
(a) None of the Pledged Equity Interests are subject to any prior pledge, assignment, lien, security interest, charge, option, warrant, right of first refusal, or other encumbrance or restriction of any kind, other than the first-priority security interest in favor of the Collateral Agent created pursuant to this Agreement and, to the extent applicable, any Permitted Liens.
(b) All previously existing liens and security interests of Atlas Meridian Bank, N.A. (as administrative agent and collateral agent under the Existing Credit Facilities) in and to the equity interests of the Pledged Entity have been, or concurrently herewith are being, released and terminated in connection with the repayment and payoff of the Existing Credit Facilities at closing. The Pledgor has received, or the Borrower has caused to be delivered, UCC-3 termination statements and such other release documentation as may be necessary to evidence the release and termination of all such prior liens and security interests.
Section 3.07 — Consents
No consent, approval, authorization, or order of, or filing, registration, or qualification with, any court, governmental authority, regulatory body, or other third party is required in connection with the execution, delivery, and performance by the Pledgor of this Agreement or the pledge of the Pledged Equity Interests hereunder, except for:
(i) the filing of UCC-1 financing statements with the Secretary of State of the State of Delaware naming the Pledgor as debtor and the Collateral Agent as secured party, which financing statements have been or will be filed on or about the date hereof;
(ii) any filings, registrations, notices, or other actions that may be required under applicable Canadian federal or provincial law (including under the Personal Property Security Act (British Columbia) or the Bank Act (Canada)), which are not conditions precedent to the closing of the transactions contemplated by the Credit Agreement; and
(iii) such consents, approvals, authorizations, filings, registrations, or qualifications as have been obtained or made and are in full force and effect.
Section 3.08 — No Options or Commitments
The Pledgor has not granted, and there are not currently outstanding, any options, warrants, calls, subscriptions, conversion rights, exchange rights, or other rights, agreements, or commitments of any kind obligating the Pledgor or the Pledged Entity to issue, sell, transfer, or otherwise dispose of any equity interest in the Pledged Entity, or any securities convertible into or exchangeable for any equity interest in the Pledged Entity, other than as expressly permitted under the Credit Agreement.
Section 3.09 — Certificated or Uncertificated Interests
(a) As of the date hereof, the Pledged Equity Interests are represented by certificates, as set forth on Schedule I hereto. The Pledgor has delivered to the Collateral Agent (or to its designated bailee, which, as of the date hereof, is the Collateral Agent at its offices at 320 Federal Street, Boston, Massachusetts 02110) all original certificates representing the Pledged Equity Interests, accompanied by duly executed stock powers and/or transfer instruments endorsed in blank, in the form attached hereto as Exhibit A (each, a "Stock Power"), sufficient to transfer the Pledged Equity Interests to the Collateral Agent or its designee without further action.
(b) To the extent any Pledged Equity Interests are at any time in the future uncertificated, the Pledgor shall cause the Pledged Entity to register the security interest of the Collateral Agent on its books and records and shall take all steps necessary to give the Collateral Agent "control" (as defined in Sections 8-106 and 9-106 of the UCC, as applicable) over such uncertificated Pledged Equity Interests, including, without limitation, causing the Pledged Entity to enter into a control agreement with the Collateral Agent in form and substance reasonably satisfactory to the Collateral Agent.
Section 3.10 — Jurisdiction of Organization
(a) The Pledgor is organized under the laws of the State of Delaware. The Pledgor's exact legal name, as it appears on its certificate of incorporation filed with the Secretary of State of the State of Delaware, is "Nexford International Holdings, Inc."
(b) For purposes of filing UCC financing statements and for all other purposes under the UCC, the Pledgor's jurisdiction of organization is the State of Delaware.
(c) The Pledgor has not, during the five (5) years prior to the date hereof, been known by any other legal name, been organized in any other jurisdiction, or been the subject of any merger, consolidation, or other reorganization transaction, except as disclosed to the Collateral Agent in writing prior to the date hereof.
ARTICLE IV — COVENANTS OF THE PLEDGOR
The Pledgor covenants and agrees with the Collateral Agent and the Secured Parties as follows, at all times from and after the date hereof until this Agreement is terminated in accordance with Article VII:
Section 4.01 — Preservation of Pledge; Further Assurances
(a) The Pledgor shall, at its own cost and expense, take all actions necessary or reasonably requested by the Collateral Agent to establish, maintain, protect, perfect, and continue the first-priority perfected security interest of the Collateral Agent in the Pledged Equity Interests for the benefit of the Secured Parties, including, without limitation:
(i) the filing of UCC continuation statements at least six (6) months prior to the expiration of each initial financing statement (and any continuation thereof) filed with the Secretary of State of the State of Delaware;
(ii) the filing of amendments to UCC financing statements as may be necessary to reflect any change in the Pledgor's name, identity, jurisdiction of organization, or organizational structure;
(iii) the filing of additional UCC financing statements or other filings in any jurisdiction as may be required to maintain perfection of the security interest;
(iv) the delivery of additional certificates, stock powers, endorsements, assignments, and other instruments and documents as the Collateral Agent may reasonably request; and
(v) the execution and delivery of such further agreements, instruments, and documents, and the taking of such further actions, as the Collateral Agent may reasonably request in order to carry out the intent and purposes of this Agreement.
(b) The initial UCC-1 financing statement naming Nexford International Holdings, Inc. as debtor and Crescent Harbor Bank, N.A. as secured party has been or will be filed with the Secretary of State of the State of Delaware on or about March 28, 2025, covering the Pledged Equity Interests and all Proceeds thereof.
Section 4.02 — Restriction on Transfer and Liens
(a) The Pledgor shall not, directly or indirectly, sell, assign, transfer, exchange, convey, or otherwise dispose of, or grant any option, warrant, or other right with respect to, any of the Pledged Equity Interests, except as expressly permitted by the Credit Agreement (including dispositions permitted under the "Permitted Dispositions" provisions thereof).
(b) The Pledgor shall not create, incur, assume, or suffer or permit to exist any lien, security interest, pledge, assignment, charge, encumbrance, or restriction on or with respect to any of the Pledged Equity Interests, other than (i) the first-priority security interest in favor of the Collateral Agent created pursuant to this Agreement, and (ii) Permitted Liens as defined in, and to the extent expressly permitted by, the Credit Agreement.
Section 4.03 — Dividends and Distributions
(a) Prior to the occurrence and during the continuance of an Event of Default, the Pledgor shall be entitled to receive and retain all cash dividends and other distributions paid in the ordinary course of business in respect of the Pledged Equity Interests, subject to and in compliance with the restricted payment covenants set forth in the Credit Agreement, including without limitation (i) the Twenty-Five Million Dollar ($25,000,000) annual general basket for restricted payments, (ii) the builder basket, with a starter amount of Fifty Million Dollars ($50,000,000) plus fifty percent (50%) of cumulative Consolidated Net Income (as defined in the Credit Agreement) of the Borrower and its restricted subsidiaries, computed on a cumulative basis from and including the first fiscal quarter of 2025, and (iii) unlimited restricted payments, subject to pro forma compliance with a total net leverage ratio not exceeding 3.75 to 1.00, in each case as more fully set forth in the Credit Agreement.
(b) Upon the occurrence and during the continuance of an Event of Default, at the direction of the Collateral Agent (acting at the instruction of the Required Lenders), all dividends, distributions (whether in cash, securities, or other property), returns of capital, interest, and all other amounts payable in respect of the Pledged Equity Interests shall be paid directly to the Collateral Agent and shall be applied to the Obligations in accordance with Section 5.04 hereof. If the Pledgor receives any such dividends, distributions, or other amounts after the occurrence and during the continuance of an Event of Default, the Pledgor shall hold the same in trust for the Collateral Agent, segregated from the Pledgor's other funds, and shall promptly deliver the same to the Collateral Agent in the exact form received (with any necessary endorsements).
Section 4.04 — Voting Rights
(a) Prior to the occurrence and during the continuance of an Event of Default, the Pledgor shall be entitled to exercise all voting and consensual rights and powers pertaining to the Pledged Equity Interests for all purposes not inconsistent with the terms of this Agreement, the Credit Agreement, or any other Loan Document; provided that the Pledgor shall not cast any vote or give any consent or take any action that would be inconsistent with any provision of any Loan Document, or that would reasonably be expected to impair, diminish, or otherwise adversely affect the value of any of the Pledged Equity Interests or the position, rights, or interests of the Collateral Agent or any Secured Party.
(b) Upon the occurrence and during the continuance of an Event of Default, at the direction of the Collateral Agent (acting at the instruction of the Required Lenders), the Collateral Agent shall have the sole and exclusive right to exercise (or to refrain from exercising) all voting and consensual rights and powers pertaining to the Pledged Equity Interests. In furtherance of the foregoing, the Pledgor hereby irrevocably grants to the Collateral Agent an irrevocable proxy, coupled with an interest, to vote or to take any action with respect to the Pledged Equity Interests, such proxy to be effective only upon the occurrence and during the continuance of an Event of Default. The Pledgor hereby revokes any and all previous proxies with regard to the Pledged Equity Interests and agrees not to grant any subsequent proxies inconsistent herewith so long as this Agreement remains in effect.
Section 4.05 — Maintenance of Pledged Entity
(a) The Pledgor shall cause the Pledged Entity to remain at all times duly organized, validly existing, and, to the extent applicable, in good standing under the laws of the Province of British Columbia, Canada.
(b) The Pledgor shall not permit the Pledged Entity to amend, modify, or supplement its articles, notice of articles, memorandum, or other organizational documents in any manner that would be materially adverse to the rights, interests, or remedies of the Collateral Agent or any Secured Party under this Agreement, the Credit Agreement, or any other Loan Document, without the prior written consent of the Collateral Agent (acting at the direction of the Required Lenders), such consent not to be unreasonably withheld, conditioned, or delayed.
(c) The Pledgor shall not permit the Pledged Entity to merge, amalgamate, consolidate, wind up, dissolve, or liquidate, or to sell, transfer, or otherwise dispose of all or substantially all of its assets, except as expressly permitted by the Credit Agreement.
Section 4.06 — Additional Equity Interests
(a) If, at any time after the date hereof, the Pledgor acquires or receives any additional equity interests of the Pledged Entity (whether by subscription, purchase, stock dividend, stock split, recapitalization, reclassification, exercise of warrants or options, or otherwise), the Pledgor shall promptly (and in any event within ten (10) Business Days of such acquisition or receipt):
(i) pledge to the Collateral Agent, for the benefit of the Secured Parties, (A) sixty-five percent (65%) of any additional Voting Equity Interests so acquired or received and (B) one hundred percent (100%) of any additional Non-Voting Equity Interests so acquired or received;
(ii) deliver to the Collateral Agent all certificates (if any) representing such additional equity interests, together with duly executed stock powers or transfer instruments endorsed in blank;
(iii) execute and deliver to the Collateral Agent a supplement to this Agreement substantially in the form of Exhibit B hereto (each, a "Pledge Supplement"), together with an updated Schedule I;
(iv) take all actions necessary to perfect the security interest of the Collateral Agent in such additional equity interests, including the filing of amendments to UCC financing statements; and
(v) deliver to the Collateral Agent a written notice describing such additional equity interests in reasonable detail.
(b) Any additional equity interests pledged pursuant to this Section 4.06 shall constitute Pledged Equity Interests for all purposes of this Agreement.
Section 4.07 — Change of Name, Jurisdiction, or Structure
The Pledgor shall not (a) change its legal name or any name under which it does business, (b) change its jurisdiction of organization, (c) change its organizational structure (including by merger, conversion, or reorganization), or (d) change its organizational identification number assigned by the Secretary of State of the State of Delaware, in each case without providing at least thirty (30) days' prior written notice to the Collateral Agent and, prior to or concurrently with such change, taking all actions necessary or advisable to maintain the perfection and first-priority status of the security interest of the Collateral Agent in the Pledged Equity Interests, including, without limitation, the filing of appropriate amendments to UCC financing statements, the filing of new UCC financing statements in any new jurisdiction of organization, and the delivery of updated Schedules to this Agreement.
Section 4.08 — Intercreditor Agreement Compliance
(a) The security interest granted hereunder and the rights and remedies of the Collateral Agent and the Secured Parties under this Agreement are subject in all respects to the terms and provisions of the First Lien/Unsecured Intercreditor Agreement dated as of March 28, 2025 (the "Intercreditor Agreement"), among Crescent Harbor Bank, N.A. as First Lien Collateral Agent, Pinnacle Trust Company as Unsecured Notes Trustee (in its capacity as trustee for the $250,000,000 7.250% Senior Unsecured Notes due 2028 issued by the Borrower), and the Borrower.
(b) In the event of any conflict or inconsistency between the terms and provisions of this Agreement and the terms and provisions of the Intercreditor Agreement, the terms and provisions of the Intercreditor Agreement shall govern and control to the extent of such conflict or inconsistency, and this Agreement shall be deemed modified to the extent necessary to give effect to the terms of the Intercreditor Agreement.
(c) Each Secured Party, by its acceptance of the benefits of this Agreement, is deemed to have agreed to be bound by the terms of the Intercreditor Agreement.
Section 4.09 — Sanctions, Anti-Corruption, and Anti-Money Laundering Compliance
(a) The Pledgor represents and warrants that no part of the Pledged Equity Interests or Proceeds thereof has been or will be used, directly or indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any anti-corruption law applicable to the Pledgor, including the United States Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), (ii) for the purpose of funding, financing, or facilitating any activities, business, or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any other manner that would result in liability to the Pledgor or any Secured Party under applicable Sanctions (including Sanctions administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, or His Majesty's Treasury of the United Kingdom), anti-corruption laws, or anti-money laundering laws (including the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.)).
(b) No director, officer, employee, or agent of the Pledgor is a "Sanctioned Person" (as defined in the Credit Agreement), and the Pledgor is not located, organized, or resident in a country or territory that is the subject or target of comprehensive Sanctions.
(c) The Pledgor covenants that it shall maintain in effect and enforce policies and procedures reasonably designed to ensure compliance by the Pledgor and its directors, officers, employees, and agents with applicable Sanctions, anti-corruption laws, and anti-money laundering laws.
ARTICLE V — REMEDIES UPON EVENT OF DEFAULT
Section 5.01 — Events of Default
An "Event of Default" under the Credit Agreement shall constitute an Event of Default under this Agreement. Without limiting the foregoing, Events of Default under the Credit Agreement include, among others, (a) failure to make any payment of principal or interest when due, (b) failure to make any other payment within any applicable grace period, (c) breach of any representation or warranty in any material respect, (d) failure to perform or observe any covenant or agreement (subject to applicable cure periods), (e) cross-default to other indebtedness in excess of the threshold amount specified in the Credit Agreement, (f) commencement of bankruptcy, insolvency, or similar proceedings, (g) the occurrence of a Change of Control (as defined in the Credit Agreement), and (h) one or more final judgments in excess of the threshold amount specified in the Credit Agreement, in each case as more fully described in the Credit Agreement.
Section 5.02 — Remedies
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, at the direction of the Required Lenders, shall) exercise any or all of the following rights and remedies, in addition to any other rights and remedies available to the Collateral Agent and the Secured Parties under this Agreement, the Credit Agreement, any other Loan Document, the UCC, and applicable law:
(a) Foreclosure. The Collateral Agent may foreclose upon and realize against any or all of the Pledged Equity Interests, in any manner and to the fullest extent permitted by applicable law.
(b) Sale or Disposition. The Collateral Agent may sell, assign, or otherwise dispose of any or all of the Pledged Equity Interests at one or more public or private sales, with or without advertisement, at such price or prices and upon such terms and conditions as the Collateral Agent may deem commercially reasonable. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Pledgor shall be entitled to credit against the Obligations for the net proceeds of any such sale or disposition actually received by the Collateral Agent, after application in accordance with Section 5.04 hereof.
(c) UCC Remedies. The Collateral Agent may exercise all of the rights and remedies of a secured party under the UCC (including Article 9 thereof), including, without limitation, the right to accept the Pledged Equity Interests in full or partial satisfaction of the Obligations, subject to the provisions of the UCC.
(d) Collection of Dividends and Distributions. The Collateral Agent may collect, receive, and retain all dividends, distributions, interest, and other amounts payable in respect of the Pledged Equity Interests, and apply the same to the Obligations.
(e) Transfer and Registration. The Collateral Agent may cause any or all of the Pledged Equity Interests to be transferred into the name of the Collateral Agent or its nominee, with or without any indication that the Pledged Equity Interests are subject to the security interest created hereunder, and the Pledgor hereby authorizes the Pledged Entity to register any such transfer on its books and records.
(f) Voting and Consensual Rights. The Collateral Agent may exercise (or refrain from exercising) all voting and consensual rights pertaining to the Pledged Equity Interests, including without limitation the right to vote on any matter submitted to a vote of shareholders of the Pledged Entity, to give or withhold any consent, and to take or refrain from taking any action with respect to the governance and affairs of the Pledged Entity.
The rights, remedies, and powers of the Collateral Agent under this Section 5.02 are cumulative and not exclusive of any other rights, remedies, or powers that may be available to the Collateral Agent at law, in equity, or otherwise.
Section 5.03 — Private Sale Acknowledgment
(a) The Pledgor acknowledges and agrees that the Pledged Equity Interests are of a type that may be subject to restrictions on transfer under applicable securities laws, including Canadian federal and provincial securities laws, the United States Securities Act of 1933, as amended, and applicable U.S. state securities or "blue sky" laws. The Pledgor further acknowledges and agrees that, as a consequence of such restrictions, the Collateral Agent may be unable to effect a public sale of any or all of the Pledged Equity Interests, and that a private sale or other disposition may be the only available means of realizing upon the Pledged Equity Interests.
(b) The Pledgor agrees that a private sale conducted in a commercially reasonable manner shall not be deemed to be commercially unreasonable solely because it was conducted privately rather than publicly, or because the price obtained at such private sale was less than the price that might have been obtained at a public sale or at a sale conducted under different conditions. To the extent permitted by applicable law, the Pledgor hereby waives any right it may have to require the Collateral Agent to pursue or exhaust any particular remedy or to proceed in any particular order in the exercise of remedies hereunder.
(c) The Pledgor shall cooperate with the Collateral Agent in connection with any sale or disposition of the Pledged Equity Interests upon an Event of Default, including, without limitation, furnishing information, executing and delivering documents, and taking all actions as may be reasonably required by the Collateral Agent to consummate any such sale or disposition in an orderly and commercially reasonable manner.
Section 5.04 — Application of Proceeds
The net cash proceeds actually received by the Collateral Agent from any foreclosure, sale, collection, or other disposition of the Pledged Equity Interests pursuant to this Article V shall be applied in the following order of priority:
First, to the payment of all costs and expenses of the Collateral Agent incurred in connection with such foreclosure, sale, collection, or other disposition, including, without limitation, reasonable fees and disbursements of legal counsel, accountants, appraisers, brokers, financial advisors, and other professionals retained by the Collateral Agent;
Second, to the payment of the Obligations in such order and in such manner as the Collateral Agent (acting at the direction of the Required Lenders) shall determine, in accordance with the Credit Agreement and the Intercreditor Agreement;
Third, any surplus remaining after the indefeasible payment in full of all Obligations shall be delivered to the Pledgor or to such other person as may be entitled thereto under applicable law or as directed by a court of competent jurisdiction.
Section 5.05 — Collateral Agent Appointed as Attorney-in-Fact
(a) The Pledgor hereby irrevocably constitutes and appoints the Collateral Agent (and any officer or agent of the Collateral Agent, with full power of substitution) as the Pledgor's true and lawful attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor, the Collateral Agent, or otherwise, effective upon the occurrence and during the continuance of an Event of Default, to take any and all actions and to execute, seal, acknowledge, swear to, deliver, file, and record any and all instruments, documents, and agreements that the Collateral Agent may deem necessary or desirable in order to:
(i) exercise the rights and remedies of the Collateral Agent under this Agreement, the Credit Agreement, any other Loan Document, the UCC, and applicable law;
(ii) collect, receive, and give receipts for any Proceeds of the Pledged Equity Interests;
(iii) endorse, negotiate, and transfer any certificates, instruments, or other documents representing the Pledged Equity Interests;
(iv) execute and deliver any transfers, assignments, bills of sale, or other conveyance documents with respect to the Pledged Equity Interests;
(v) institute, prosecute, settle, or discontinue any action, proceeding, or claim in connection with the Pledged Equity Interests; and
(vi) take any and all other actions and execute any and all other documents that the Collateral Agent may deem necessary or desirable in order to realize upon the Pledged Equity Interests.
(b) The power of attorney granted in this Section 5.05 is irrevocable and coupled with an interest, and shall not be affected by any subsequent disability or incapacity of the Pledgor or by any act of the Pledgor purporting to revoke such power of attorney.
(c) The Pledgor hereby ratifies all actions taken by the Collateral Agent (or its officers, agents, or substitutes) as the Pledgor's attorney-in-fact in accordance with this Section 5.05.
ARTICLE VI — THE COLLATERAL AGENT
Section 6.01 — Appointment and Authority
The Collateral Agent acts under this Agreement in its capacity as collateral agent for the benefit of the Secured Parties, in accordance with the terms and provisions of the Credit Agreement (including Article IX thereof) and the other Loan Documents. Crescent Harbor Bank, N.A. serves simultaneously as Administrative Agent and Collateral Agent under the Credit Agreement and this Agreement; its principal office is located at 320 Federal Street, Boston, Massachusetts 02110. The Collateral Agent has been authorized by the Secured Parties to enter into this Agreement and to exercise and enforce the rights, powers, and remedies granted to the Collateral Agent hereunder, all in accordance with the terms of the Credit Agreement. Each reference herein to the Collateral Agent taking any action "at the direction of the Required Lenders" shall mean the Collateral Agent acting upon the written instructions of the Required Lenders in accordance with the applicable provisions of the Credit Agreement.
Section 6.02 — Duties and Liabilities
(a) The Collateral Agent shall have no obligations, duties, or liabilities under this Agreement except those expressly set forth herein and in the Credit Agreement. Without limiting the generality of the foregoing, the Collateral Agent shall not be required to take any action that is contrary to applicable law or to the terms of the Credit Agreement or any other Loan Document, or that would subject the Collateral Agent to liability unless the Collateral Agent shall be furnished an indemnity in form and substance satisfactory to the Collateral Agent.
(b) The Collateral Agent shall not be liable for any action taken or omitted to be taken by it in connection with this Agreement or the Pledged Equity Interests, except to the extent that a court of competent jurisdiction shall have determined by final, non-appealable judgment that such action or omission constituted gross negligence or willful misconduct on the part of the Collateral Agent. In no event shall the Collateral Agent be liable for any indirect, special, incidental, consequential, or punitive damages of any kind whatsoever.
(c) The Collateral Agent shall not be responsible for the existence, genuineness, value, or protection of any of the Pledged Equity Interests, for the legality, validity, enforceability, or sufficiency of this Agreement or any other document, for the perfection or priority of any security interest, or for the filing or re-filing of any financing statement.
Section 6.03 — Successor Collateral Agent