CONFIDENTIAL DRAFT — SUBJECT TO FURTHER NEGOTIATION
HOLDINGS PLEDGE AGREEMENT
[DRAFT — March 10, 2025]
Prepared by: Calderwood & Harkness LLP 425 Lexington Avenue New York, New York 10017 Matter No. 1005-00001
NIH Credit Agreement — Draft 1 (Holdings Pledge Agreement)
HOLDINGS PLEDGE AGREEMENT
This HOLDINGS PLEDGE AGREEMENT (this "Agreement"), dated as of [●], 2025, is entered into by and between:
GRANITE PEAK NIH HOLDINGS, LLC, a Delaware limited liability company (the "Pledgor" or "Holdings"), with its registered address at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801 (Delaware Secretary of State File Number 7234891; EIN 85-3291047),
and
CRESCENT HARBOR BANK, N.A., a national banking association organized and existing under the laws of the United States of America, with offices at 320 Federal Street, Boston, Massachusetts 02110, acting in its capacity as Collateral Agent for the benefit of the Secured Parties (as defined below) (in such capacity, the "Collateral Agent").
RECITALS
WHEREAS, reference is made to that certain Credit Agreement, dated as of [●], 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" or "Nexford") (Delaware Secretary of State File Number 5765432; EIN 36-4178552), with its principal office at 1400 Industrial Parkway, Schaumburg, Illinois 60173, the Guarantors party thereto from time to time, Crescent Harbor Bank, N.A., as Administrative Agent and Collateral Agent, Ironwood Capital Markets, LLC and Northvane Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners, and the Lenders party thereto from time to time;
WHEREAS, the Credit Agreement provides for a senior secured term loan B facility in an aggregate principal amount of One Billion Four Hundred Million Dollars ($1,400,000,000) (the "Term Loan B Facility") to be made available to the Borrower on the terms and subject to the conditions set forth therein;
WHEREAS, Holdings is the direct parent of the Borrower and holds one hundred percent (100%) of the issued and outstanding equity interests (consisting of shares of capital stock) of the Borrower;
WHEREAS, Holdings is owned ninety-two percent (92%) by Granite Peak Capital Fund IV, LP and eight percent (8%) by GP Fund IV Co-Invest, LP, and is required to be a Guarantor under the Credit Agreement;
WHEREAS, Holdings has entered into a Guarantee Agreement of even date herewith (the "Guarantee Agreement") among Holdings, the Subsidiary Guarantors party thereto, and the Collateral Agent, pursuant to which Holdings has guaranteed the Obligations (as defined in the Credit Agreement) owing under the Credit Agreement and the other Loan Documents;
WHEREAS, it is a condition precedent to the making of the Term Loans under the Credit Agreement that Holdings pledge one hundred percent (100%) of its equity interests in the Borrower to the Collateral Agent for the benefit of the Secured Parties to secure the Obligations;
WHEREAS, the proceeds of the Term Loans will be used to (i) refinance existing indebtedness of the Borrower under the existing Credit Agreement dated as of June 14, 2019 by and among the Borrower, certain subsidiaries of the Borrower, Atlas Meridian Bank, N.A., as administrative agent and collateral agent, and the lenders party thereto (the "Existing Credit Agreement"), with an aggregate payoff amount of approximately Eight Hundred Seventy-Nine Million Three Hundred Seventy-Five Thousand Dollars ($879,375,000), (ii) fund a dividend distribution of approximately Three Hundred Thirty-Five Million Dollars ($335,000,000) to Holdings, (iii) pay transaction fees and expenses of approximately Thirty-Eight Million Six Hundred Twenty-Five Thousand Dollars ($38,625,000), and (iv) provide approximately One Hundred Forty-Seven Million Dollars ($147,000,000) in cash to the Borrower's balance sheet;
WHEREAS, Holdings will benefit, directly and indirectly, from the extension of credit to the Borrower under the Credit Agreement, including through the receipt of the dividend distribution described above, and Holdings has determined that the execution, delivery, and performance of this Agreement is in the best interests of Holdings;
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 following meanings:
"Agreement" means this Holdings Pledge Agreement, including all Schedules and Exhibits hereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Borrower" means Nexford Industrial Holdings Inc., a Delaware corporation (Delaware Secretary of State File Number 5765432; EIN 36-4178552).
"Closing Date" has the meaning assigned to such term in the Credit Agreement.
"Collateral" has the meaning assigned to such term in Section 2.01 of this Agreement.
"Collateral Agent" means Crescent Harbor Bank, N.A., a national banking association, in its capacity as collateral agent for the Secured Parties under the Credit Agreement, together with its successors and assigns in such capacity.
"Credit Agreement" means the Credit Agreement, dated as of [●], 2025, among 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 Joint Bookrunners, and the Lenders party thereto from time to time, as the same may be amended, restated, amended and restated, supplemented, refinanced, replaced, or otherwise modified from time to time.
"Default" has the meaning assigned to such term in the Credit Agreement.
"Equity Interests" means all shares of capital stock, limited liability company interests, membership interests, partnership interests, joint venture interests, or other ownership or equity interests in or securities of any Person, including all rights, options, warrants, conversion rights, exchange rights, and other agreements or rights to acquire any of the foregoing.
"Event of Default" has the meaning assigned to such term in the Credit Agreement.
"Guarantee Agreement" means the Guarantee Agreement, dated as of the date hereof, among Holdings, the Subsidiary Guarantors party thereto, and the Collateral Agent for the benefit of the Secured Parties, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Holdings" means Granite Peak NIH Holdings, LLC, a Delaware limited liability company (Delaware Secretary of State File Number 7234891; EIN 85-3291047).
"Obligations" has the meaning assigned to such term in the Credit Agreement and includes all obligations of the Borrower and each Guarantor to any Secured Party under the Credit Agreement, the Guarantee Agreement, and each other Loan Document, whether now existing or hereafter arising, direct or indirect, absolute or contingent, and howsoever evidenced, held, or acquired, including all obligations for principal, interest, fees, premiums, penalties, expenses, indemnities, reimbursement obligations, and all other amounts of any kind or nature.
"Permitted Liens" has the meaning assigned to such term in the Credit Agreement.
"Person" has the meaning assigned to such term in the Credit Agreement.
"Pledged Equity Interests" means one hundred percent (100%) of the issued and outstanding shares of capital stock of the Borrower held by Holdings, as more particularly described on Schedule I hereto, together with (i) all certificates, instruments, and other documents representing or evidencing such interests, (ii) all rights to receive dividends, distributions, returns of capital, and other amounts payable in respect of such interests, (iii) all voting rights associated therewith, (iv) all other rights, privileges, powers, and preferences pertaining thereto, and (v) all additional equity interests of the Borrower acquired by Holdings at any time after the date hereof.
"Proceeds" means all "proceeds" as defined in Article 9 of the Uniform Commercial Code as in effect in the State of New York, and, in any event, shall include, without limitation, all dividends, distributions (whether in cash, property, securities, or otherwise), cash, instruments, investment property, and other property received in respect of, or in exchange for, or as a replacement of, the Pledged Equity Interests, including all proceeds of insurance and all amounts received under any indemnity, warranty, or guaranty payable by reason of loss or damage to or otherwise with respect to the Pledged Equity Interests.
"Required Lenders" has the meaning assigned to such term in the Credit Agreement.
"Secured Parties" has the meaning assigned to such term in the Credit Agreement and includes the Administrative Agent, the Collateral Agent, and each Lender from time to time party to the Credit Agreement.
"Security Agreement" means the Security Agreement, dated as of the date hereof, among the Borrower, the Guarantors party thereto, and the Collateral Agent for the benefit of the Secured Parties, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Termination Date" has the meaning assigned to such term in Section 8.01 of this Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or, where the perfection or the effect of perfection or non-perfection of the security interest created hereby is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York (including the State of Delaware), the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions thereof relating to such perfection or the effect of perfection or non-perfection.
Section 1.02 — Credit Agreement Definitions Incorporated
Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement. The rules of construction and interpretation set forth in the Credit Agreement (including, without limitation, provisions relating to section references, "including" and similar terms, and the treatment of defined terms in the singular and plural) shall apply mutatis mutandis to this Agreement as if fully set forth herein.
Section 1.03 — UCC Terms
Terms defined in the UCC that are not otherwise defined herein or in the Credit Agreement shall have the respective meanings set forth in the UCC, including, without limitation, the terms "general intangible," "investment property," "security," "security entitlement," "financial asset," "certificated security," "uncertificated security," "securities account," "securities intermediary," and "entitlement holder."
ARTICLE II — PLEDGE AND GRANT OF SECURITY INTEREST
Section 2.01 — Pledge and Grant
As security for the prompt and complete payment and performance of all Obligations, Holdings hereby pledges, assigns, hypothecates, and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a first-priority security interest in and lien upon all of the following property, whether now owned or hereafter acquired by Holdings, wherever located (collectively, the "Collateral"):
(a) all Pledged Equity Interests described on Schedule I hereto, consisting of one hundred percent (100%) of the issued and outstanding shares of common stock of Nexford Industrial Holdings Inc., a Delaware corporation;
(b) all certificates, instruments, and other documents, if any, representing or evidencing the Pledged Equity Interests;
(c) all rights to receive dividends, distributions (whether in cash, property, securities, or otherwise), returns of capital, and other amounts payable in respect of, or in exchange for, any and all of the Pledged Equity Interests;
(d) all voting rights associated with, and all other rights, privileges, powers, and preferences pertaining to, the Pledged Equity Interests;
(e) all rights, warrants, options, conversion rights, exchange rights, and other agreements or rights to acquire additional Equity Interests of the Borrower; and
(f) all Proceeds of any and all of the foregoing Collateral, including, without limitation, all proceeds of insurance and all amounts received under any indemnity, warranty, or guaranty payable by reason of loss or damage to or otherwise with respect to any of the foregoing.
Section 2.02 — Security for Obligations
The Collateral secures the prompt and complete payment and performance when due (whether at stated maturity, by acceleration, or otherwise) of all Obligations under the Credit Agreement, the Guarantee Agreement, and all other Loan Documents, whether now existing or hereafter arising, direct or indirect, absolute or contingent, and whether for principal (including, without limitation, the aggregate principal amount of the $1,400,000,000 Term Loan B Facility), interest (including interest accruing at the contract rate of SOFR plus 400 basis points per annum, and interest accruing at the default rate, as applicable), fees, premiums, expenses, indemnities, reimbursement obligations, or otherwise. The security interest created hereby shall extend to and cover all Obligations howsoever created, arising, evidenced, or held, whether now existing or hereafter arising.
Section 2.03 — Continuing Security Interest
This Agreement creates a continuing security interest in the Collateral that shall remain in full force and effect until the Termination Date (as defined in Section 8.01 hereof). The pledge, assignment, hypothecation, and grant of a security interest effected hereby is irrevocable until the Termination Date and shall not be affected by the existence of any other security or guarantee for the Obligations, any amendment or modification of the terms of the Credit Agreement or any other Loan Document, or any other circumstance that might otherwise constitute a defense available to, or a legal or equitable discharge of, a surety or guarantor.
ARTICLE III — DELIVERY AND PERFECTION
Section 3.01 — Delivery of Certificates
In order to perfect the security interest of the Collateral Agent in the Pledged Equity Interests, Holdings shall deliver to the Collateral Agent (or its designated representative) on or before the Closing Date (or, in the case of equity interests acquired after the Closing Date, within the time periods specified in the Credit Agreement for delivery of after-acquired collateral):
(a) all certificates, if any, representing the Pledged Equity Interests, duly endorsed in blank or accompanied by irrevocable stock powers duly executed in blank by Holdings in the form attached hereto as Exhibit A (or in such other form as may be satisfactory to the Collateral Agent), in each case with signatures guaranteed by a commercial bank or broker-dealer acceptable to the Collateral Agent;
(b) in the event that any Pledged Equity Interests are uncertificated securities, Holdings shall (i) cause the Borrower (as issuer of such uncertificated securities) to register the pledge of such uncertificated securities on its books and records in favor of the Collateral Agent and (ii) cause the Borrower to deliver to the Collateral Agent a written acknowledgment, in form and substance satisfactory to the Collateral Agent, confirming such registration of the pledge; and
(c) such additional documents and instruments as the Collateral Agent may reasonably request to confirm and evidence the delivery and perfection of the security interest created hereby.
Holdings acknowledges and confirms that the Borrower is a Delaware corporation and that the shares of capital stock of the Borrower may be represented by certificates. Holdings shall confirm the certificate status of the Pledged Equity Interests and deliver all certificates accordingly. In the event the Borrower's organizational documents currently provide for uncertificated shares, Holdings shall use commercially reasonable efforts to cause the Borrower to issue certificated shares representing the Pledged Equity Interests and to deliver such certificates to the Collateral Agent in accordance with clause (a) above.
Section 3.02 — UCC Financing Statements
Holdings hereby authorizes the Collateral Agent, at any time and from time to time, to file (or cause to be filed) UCC-1 financing statements in the office of the Secretary of State of the State of Delaware (and in such other filing offices as the Collateral Agent may determine to be necessary or appropriate) naming Granite Peak NIH Holdings, LLC (Delaware Secretary of State File Number 7234891) as Debtor and Crescent Harbor Bank, N.A. as Secured Party, describing the Collateral and covering the Pledged Equity Interests and all Proceeds thereof. The form of the initial UCC-1 financing statement to be filed with the Delaware Secretary of State is attached hereto as Exhibit B. Holdings agrees to execute and deliver, and authorizes the Collateral Agent to file, any amendments, continuation statements, or other filings as may be necessary or desirable to maintain the perfection and priority of the security interest of the Collateral Agent in the Collateral. Holdings acknowledges that, pursuant to Section 9-509 of the UCC, no authorization from Holdings is required for the Collateral Agent to file financing statements or amendments thereto.
Section 3.03 — Further Assurances Regarding Perfection
Holdings shall take all actions necessary or reasonably requested by the Collateral Agent to perfect and maintain the first-priority security interest of the Collateral Agent in the Collateral, including, without limitation:
(a) executing and delivering to the Collateral Agent additional instruments of pledge, transfer, or assignment, in form and substance satisfactory to the Collateral Agent;
(b) causing the Borrower to note the pledge of the Pledged Equity Interests on its stock register, books, and records, and to provide written confirmation thereof to the Collateral Agent;
(c) marking Holdings' own books and records to reflect the existence of the security interest created hereby in favor of the Collateral Agent;
(d) obtaining any consents, approvals, or waivers from any Person that may be necessary or desirable to effect or perfect the security interest created hereby (it being understood and agreed that, as of the date hereof, no such consents, approvals, or waivers are required under the organizational documents of Holdings or the Borrower); and
(e) executing and delivering control agreements, account control agreements, or other agreements, as may be reasonably requested by the Collateral Agent, to the extent the Collateral Agent determines that such agreements are necessary or appropriate to perfect its security interest in any portion of the Collateral.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES
Holdings hereby represents and warrants to the Collateral Agent and each Secured Party, as of the date hereof and as of the Closing Date, as follows:
Section 4.01 — Organization and Good Standing
Holdings is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. Holdings' certificate of formation was duly filed with the Secretary of State of the State of Delaware and has not been amended, revoked, or terminated. Holdings is duly qualified or licensed to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement).
Section 4.02 — Power and Authority
Holdings has full limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement and to pledge the Collateral pursuant hereto. The execution, delivery, and performance of this Agreement by Holdings and the pledge of the Collateral have been duly authorized by all necessary limited liability company action on the part of Holdings, including the adoption of resolutions by Holdings' manager and members on January 13, 2025, and no further action on the part of Holdings, its members, managers, or any other Person is required in connection therewith.
Section 4.03 — Enforceability
This Agreement has been duly executed and delivered by Holdings and constitutes the legal, valid, and binding obligation of Holdings, enforceable against Holdings in accordance with its terms, subject to (a) the effects of applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws affecting creditors' rights generally, (b) general principles of equity, whether considered in a proceeding at law or in equity, and (c) implied covenants of good faith and fair dealing.
Section 4.04 — No Conflicts
The execution, delivery, and performance by Holdings of this Agreement, and the pledge of the Collateral hereunder, do not and will not:
(a) violate the certificate of formation or limited liability company agreement of Holdings, or any resolutions adopted by Holdings' members or managers;
(b) violate any applicable law, statute, rule, regulation, order, writ, judgment, injunction, or decree of any governmental authority applicable to Holdings or the Collateral;
(c) result in a breach of, or constitute a default (or an event that, with the giving of notice or lapse of time or both, would constitute a default) under, or result in the termination, acceleration, or cancellation of, any material contract, agreement, indenture, or instrument to which Holdings is a party or by which Holdings or any of its properties is bound; or
(d) result in the creation or imposition of any lien, security interest, charge, or encumbrance on any property of Holdings or on the Collateral, other than the lien and security interest created by this Agreement in favor of the Collateral Agent for the benefit of the Secured Parties.
Section 4.05 — Ownership of Pledged Equity Interests
Holdings is the sole record and beneficial owner of one hundred percent (100%) of the issued and outstanding shares of capital stock of Nexford Industrial Holdings Inc., as more particularly described on Schedule I hereto. The Pledged Equity Interests constitute all of the issued and outstanding Equity Interests of the Borrower. The Pledged Equity Interests have been duly authorized, are validly issued, fully paid, and non-assessable (to the extent such concepts are applicable to a Delaware corporation under the Delaware General Corporation Law), and were issued in compliance with all applicable federal and state securities laws.
Section 4.06 — Title; No Liens
Holdings owns the Pledged Equity Interests free and clear of any and all liens, claims, charges, encumbrances, security interests, pledges, hypothecations, options, rights of first refusal, or other adverse claims or interests of any nature whatsoever, except for:
(a) the lien and security interest created by this Agreement in favor of the Collateral Agent for the benefit of the Secured Parties; and
(b) Permitted Liens as defined in the Credit Agreement.
Holdings represents that the existing liens in favor of Atlas Meridian Bank, N.A. (as collateral agent under the Existing Credit Agreement dated as of June 14, 2019) on the Pledged Equity Interests shall be released simultaneously with or immediately prior to the Closing Date upon the application of a portion of the proceeds of the Term Loans to the full repayment and discharge of the existing first lien term loan in the aggregate payoff amount of approximately Eight Hundred Seventy-Nine Million Three Hundred Seventy-Five Thousand Dollars ($879,375,000), and the filing of UCC-3 termination statements and delivery of lien release documentation in connection therewith.
Section 4.07 — Equity Interests Description
The following information regarding the Pledged Equity Interests is true, correct, and complete as of the date hereof:
(a) The Borrower is Nexford Industrial Holdings Inc., a Delaware corporation (Delaware Secretary of State File Number 5765432; EIN 36-4178552);
(b) The number, class, and certificate numbers (if applicable) of the Pledged Equity Interests are as set forth on Schedule I hereto;
(c) Holdings holds one hundred percent (100%) of the issued and outstanding Equity Interests of the Borrower; and
(d) There are no outstanding options, warrants, conversion rights, exchange rights, or other agreements or rights to acquire additional Equity Interests of the Borrower, except as may be specifically set forth on Schedule I hereto or as otherwise expressly permitted under the Credit Agreement.
Section 4.08 — No Required Consents
No consent, approval, authorization, license, or order of, or registration, qualification, or filing with, any governmental authority or any other Person is required for (a) the execution, delivery, and performance by Holdings of this Agreement, (b) the pledge of the Pledged Equity Interests by Holdings hereunder, or (c) the exercise by the Collateral Agent of any rights or remedies hereunder (including any disposition of the Pledged Equity Interests), except:
(i) the filing of UCC-1 financing statements in the office of the Secretary of State of the State of Delaware;
(ii) any consents, approvals, or authorizations that have been obtained and are in full force and effect as of the date hereof or as of the Closing Date; and
(iii) any filings, registrations, or approvals that may be required under applicable federal or state securities laws in connection with the disposition of the Pledged Equity Interests following an Event of Default.
Section 4.09 — Chief Executive Office; Organizational Identification
(a) Holdings' chief executive office and principal place of business is located at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801.
(b) Holdings' exact legal name, as it appears in its certificate of formation filed with the Secretary of State of the State of Delaware, is "Granite Peak NIH Holdings, LLC."
(c) Holdings' organizational identification number assigned by the Secretary of State of the State of Delaware is 7234891.
(d) Holdings' federal employer identification number (EIN) is 85-3291047.
(e) Holdings has not, during the five (5) years preceding the date hereof, been known by any other legal name or operated under any trade name, fictitious name, or assumed name other than its legal name set forth above.
Section 4.10 — No Restrictions on Pledge
(a) Neither the certificate of formation nor the limited liability company agreement of Holdings prohibits, restricts, or imposes any conditions upon the pledge, assignment, or granting of a security interest in the Equity Interests of the Borrower held by Holdings.
(b) Neither the certificate of incorporation nor the bylaws of the Borrower prohibits, restricts, or imposes any conditions upon the pledge, assignment, or granting of a security interest in the Equity Interests of the Borrower by any holder thereof, including Holdings.
(c) There is no shareholders' agreement, voting agreement, buy-sell agreement, right of first refusal, tag-along right, drag-along right, co-sale right, or other agreement or arrangement that restricts, limits, or conditions the pledgeability of the Pledged Equity Interests or the ability of the Collateral Agent to exercise remedies with respect thereto.
ARTICLE V — COVENANTS
Holdings hereby covenants and agrees with the Collateral Agent and each Secured Party as follows:
Section 5.01 — Defense of Collateral
Holdings shall, at its own cost and expense, defend the Collateral against all claims, demands, and actions of all Persons at any time claiming any interest in the Collateral adverse to the Collateral Agent or any Secured Party, and shall promptly notify the Collateral Agent in writing of any such claim, demand, or action of which Holdings becomes aware. Holdings shall take all actions reasonably necessary to preserve and protect the Collateral Agent's security interest in the Collateral, including, without limitation, prosecuting or defending any action or proceeding necessary to protect the Collateral or the Collateral Agent's interest therein.
Section 5.02 — No Disposition
Holdings shall not sell, assign, transfer, convey, exchange, lease, or otherwise dispose of, or grant any option, warrant, right of first refusal, or other right with respect to, any of the Collateral, except as expressly permitted by the Credit Agreement. Without limiting the generality of the foregoing, Holdings acknowledges that the Credit Agreement contains change of control provisions pursuant to which the acquisition by any Person or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than Granite Peak Capital Partners, LP, Granite Peak Capital Fund IV, LP, GP Fund IV Co-Invest, LP, and their respective Affiliates, of more than thirty-five percent (35%) of the voting Equity Interests of Holdings constitutes a mandatory prepayment event under the Credit Agreement. Holdings shall comply with all such provisions and shall not take any action that would trigger a mandatory prepayment event under the Credit Agreement without the prior written consent of the Collateral Agent (acting at the direction of the Required Lenders).
Section 5.03 — No Further Liens
Holdings shall not create, incur, assume, or permit to exist any lien, security interest, pledge, hypothecation, charge, or other encumbrance on, or with respect to, any of the Collateral, other than (a) the lien and security interest created by this Agreement in favor of the Collateral Agent for the benefit of the Secured Parties and (b) Permitted Liens as defined in, and to the extent expressly permitted under, the Credit Agreement.
Section 5.04 — Notice of Changes
Holdings shall provide the Collateral Agent with not less than thirty (30) days' prior written notice of any of the following:
(a) any change in Holdings' legal name or any use of any new or additional trade name, fictitious name, or assumed name;
(b) any change in Holdings' jurisdiction of organization, including any redomiciliation, conversion, or merger resulting in a change in jurisdiction;
(c) any change in Holdings' organizational identification number assigned by the Secretary of State of the State of Delaware or its federal employer identification number (EIN); and
(d) any change in the location of Holdings' chief executive office or principal place of business.
In connection with any such change, Holdings shall take all actions reasonably requested by the Collateral Agent to maintain the perfection and priority of the Collateral Agent's security interest in the Collateral, including, without limitation, executing and delivering amendments to UCC financing statements and filing such amendments in the appropriate filing offices.
Section 5.05 — Maintenance of Equity Interests
Holdings shall at all times maintain one hundred percent (100%) ownership of the issued and outstanding Equity Interests of the Borrower, consistent with the requirement under the Credit Agreement that the Borrower remain a direct wholly-owned subsidiary of Holdings. Holdings shall not permit the Borrower to issue any additional Equity Interests (including, without limitation, any shares of capital stock, options, warrants, convertible securities, or other rights to acquire Equity Interests) to any Person other than Holdings, unless such issuance is expressly permitted under the Credit Agreement and, in the event of any such permitted issuance, any such additional Equity Interests issued to Holdings shall automatically constitute Pledged Equity Interests subject to the lien and security interest of this Agreement.
Section 5.06 — Payment of Taxes and Claims
Holdings shall pay, discharge, or otherwise satisfy all taxes, assessments, governmental charges, and levies imposed upon or assessed against the Collateral before such amounts become delinquent or give rise to any lien on the Collateral, except to the extent that (a) the amount, applicability, or validity thereof is being contested in good faith by appropriate proceedings diligently conducted, (b) adequate reserves in accordance with GAAP have been established on the books of Holdings with respect thereto, and (c) the failure to pay such amounts would not reasonably be expected to result in a material adverse effect on the value of the Collateral or the Collateral Agent's security interest therein.
Section 5.07 — After-Acquired Equity Interests
If Holdings at any time after the date hereof acquires or becomes the holder of any additional Equity Interests of the Borrower, whether by subscription, purchase, exercise of options or warrants, conversion, exchange, dividend, stock split, reclassification, recapitalization, or otherwise, such additional Equity Interests shall automatically and without further action be deemed to be Pledged Equity Interests and shall be subject to the lien and security interest of this Agreement. In such event, Holdings shall promptly (and in any event within the time periods specified in the Credit Agreement for delivery of after-acquired collateral):
(a) deliver to the Collateral Agent all certificates, if any, representing such additional Equity Interests, duly endorsed in blank or accompanied by irrevocable stock powers duly executed in blank in the form attached hereto as Exhibit A;
(b) deliver to the Collateral Agent an updated Schedule I reflecting such additional Equity Interests; and
(c) take all other actions necessary to perfect the Collateral Agent's security interest in such additional Equity Interests.
Section 5.08 — Cooperation and Further Assurances
Holdings shall, at its own cost and expense, promptly execute and deliver to the Collateral Agent such further instruments, documents, agreements, and certificates, and take such further actions, as the Collateral Agent may from time to time reasonably request to effectuate the purposes of this Agreement, to carry out the terms hereof, and to perfect, protect, and enforce the security interest and lien of the Collateral Agent in the Collateral. Without limiting the generality of the foregoing, Holdings shall cooperate with the Collateral Agent in connection with any audit, inspection, or verification of the Collateral as the Collateral Agent may reasonably request.
ARTICLE VI — VOTING RIGHTS, DIVIDENDS, AND DISTRIBUTIONS
Section 6.01 — Voting Rights Prior to Event of Default
Unless and until an Event of Default shall have occurred and be continuing:
(a) Holdings shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Equity Interests for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement, or any other Loan Document, and the Collateral Agent shall, upon the request of Holdings, execute and deliver (or cause to be executed and delivered) to Holdings such proxies and other instruments as Holdings may reasonably request to enable Holdings to exercise such voting rights.
(b) Holdings shall not exercise any voting or other consensual rights pertaining to the Pledged Equity Interests in any manner that would (i) violate the terms, covenants, or conditions of this Agreement, the Credit Agreement, or any other Loan Document (including, without limitation, the negative covenants regarding Fundamental Changes, Restricted Payments, and the incurrence of Indebtedness), or (ii) have the effect of impairing the position or interests of the Collateral Agent or any Secured Party or the value of the Collateral.
Section 6.02 — Dividends and Distributions Prior to Event of Default
Unless and until an Event of Default shall have occurred and be continuing:
(a) Holdings shall be entitled to receive and retain all cash dividends, distributions, and other payments paid on or in respect of the Pledged Equity Interests, to the extent that such dividends, distributions, and payments are not restricted by the Credit Agreement or any other Loan Document. For the avoidance of doubt, the Credit Agreement contains Restricted Payment provisions, including: (i) a general annual basket of Twenty-Five Million Dollars ($25,000,000); (ii) a builder basket (commencing at Fifty Million Dollars ($50,000,000) and increasing by fifty percent (50%) of cumulative Consolidated Net Income from the first fiscal quarter of 2025); and (iii) an unlimited Restricted Payment basket, in each case subject to pro forma compliance with a Total Net Leverage Ratio of 3.75 to 1.00, and such other conditions as set forth in the Credit Agreement.
(b) Any and all non-cash dividends, stock dividends, stock splits, distributions in kind, returns of capital in securities or other property, and other non-cash distributions received by Holdings in respect of the Pledged Equity Interests shall automatically become part of the Collateral and shall be subject to the lien and security interest of this Agreement. Holdings shall promptly deliver to the Collateral Agent all certificates, instruments, and other documents representing any such non-cash dividends or distributions, together with duly executed stock powers in blank or other appropriate instruments of transfer.
Section 6.03 — Voting Rights After Event of Default
Upon the occurrence and during the continuance of an Event of Default:
(a) All rights of Holdings to exercise the voting and other consensual rights pertaining to the Pledged Equity Interests shall, at the option of the Collateral Agent (acting at the direction of the Required Lenders pursuant to the Credit Agreement), cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise all such voting and other consensual rights pertaining to the Pledged Equity Interests.
(b) Holdings shall, promptly upon the request of the Collateral Agent, execute and deliver to the Collateral Agent such proxies, voting agreements, consents, powers of attorney, and other instruments as the Collateral Agent may reasonably request in order to enable the Collateral Agent to exercise the voting and other consensual rights pertaining to the Pledged Equity Interests.
(c) Any exercise by the Collateral Agent of voting or other consensual rights following an Event of Default shall not impose any duty or obligation on the Collateral Agent, and the Collateral Agent shall not be liable for any action taken or omitted to be taken in connection with the exercise of such rights, except to the extent of its own gross negligence, bad faith, or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
Section 6.04 — Dividends and Distributions After Event of Default
Upon the occurrence and during the continuance of an Event of Default:
(a) All rights of Holdings to receive dividends, distributions, and other payments in respect of the Pledged Equity Interests shall cease, and all such rights shall thereupon become vested in the Collateral Agent for the benefit of the Secured Parties.
(b) All dividends, distributions, and other payments received by Holdings in respect of the Pledged Equity Interests after the occurrence of an Event of Default shall be received and held in trust for the benefit of the Collateral Agent and shall be immediately delivered to the Collateral Agent in the exact form received by Holdings (duly endorsed in favor of the Collateral Agent, if applicable), together with such other documents and instruments as the Collateral Agent may reasonably request.
(c) The Collateral Agent shall be entitled to apply any such dividends, distributions, and other payments received by or on behalf of the Collateral Agent to the payment of the Obligations in such order and manner as provided in the Credit Agreement (including, without limitation, the waterfall provisions set forth therein regarding the application of payments during the continuance of an Event of Default).
ARTICLE VII — REMEDIES UPON EVENT OF DEFAULT
Section 7.01 — Rights and Remedies Generally
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have, in addition to all other rights and remedies granted under this Agreement, the Guarantee Agreement, the Security Agreement, and the other Loan Documents, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) and under all other applicable laws. All rights and remedies of the Collateral Agent hereunder and under the other Loan Documents, the UCC, and other applicable law shall be cumulative and may be exercised singularly or concurrently. Without limiting the generality of the foregoing, the Obligations shall bear interest at the default rate specified in the Credit Agreement, which is an additional two hundred (200) basis points per annum above the otherwise applicable rate (resulting in an aggregate rate of SOFR plus six hundred (600) basis points per annum during the continuance of an Event of Default).
Section 7.02 — Sale of Collateral
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may, without demand of performance or other demand, advertisement, or notice of any kind (except as required by applicable law or as expressly provided herein) to or upon Holdings or any other Person (all of which demands, advertisements, and notices are hereby expressly waived by Holdings to the fullest extent permitted by applicable law):
(a) sell the Pledged Equity Interests, or any part thereof, at public or private sale, for cash, on credit, or for future delivery, at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable, it being agreed that the Collateral Agent shall have the right to sell or otherwise dispose of all or any part of the Collateral in its then-existing condition or following any commercially reasonable preparation or processing;
(b) in connection with any such sale, the Collateral Agent shall give Holdings not less than ten (10) Business Days' prior written notice of the time and place of any public sale or of the time after which any private sale or other disposition of the Collateral may be made, and Holdings agrees that ten (10) Business Days' prior written notice of any such sale or disposition shall constitute commercially reasonable notification for purposes of Section 9-611 of the UCC;
(c) the Collateral Agent may buy the Pledged Equity Interests, or any portion thereof, at any public sale and, if the Pledged Equity Interests or any portion thereof are of a type customarily sold on a recognized market or of a type that is the subject of widely distributed standard price quotations, at any private sale, and the Collateral Agent may make payment by crediting the purchase price against the Obligations;
(d) Holdings recognizes and acknowledges that the Collateral Agent may be unable to effect a public sale of all or any portion of the Pledged Equity Interests by reason of certain restrictions and prohibitions contained in applicable federal and state securities laws (including the Securities Act of 1933, as amended, and applicable state blue sky laws), and that the Collateral Agent may be compelled to resort to one or more private sales to a restricted group of purchasers that will be obliged to agree, among other things, to acquire such Pledged Equity Interests for their own account, for investment, and not with a view to the distribution or resale thereof. Holdings agrees that any such private sales shall not, by reason of their private nature alone, be deemed to have been made in a commercially unreasonable manner, and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale or other disposition of the Pledged Equity Interests for the period of time necessary to permit the Borrower to register the Pledged Equity Interests for public sale under applicable securities laws; and
(e) Holdings acknowledges that the Pledged Equity Interests represent one hundred percent (100%) of the Equity Interests of Nexford Industrial Holdings Inc., a diversified industrials and specialty manufacturing platform with approximately Two Billion One Hundred Million Dollars ($2,100,000,000) in last-twelve-months revenue and approximately Three Hundred Eighty-Five Million Dollars ($385,000,000) in last-twelve-months Adjusted EBITDA, and that the Collateral Agent or any purchaser at a sale of the Pledged Equity Interests would thereby acquire control of the Borrower and its subsidiaries and their respective businesses and assets.
Section 7.03 — Foreclosure and Transfer
Upon any sale or other disposition of the Collateral pursuant to this Article VII, the Collateral Agent shall have the right to assign, transfer, and deliver to the purchaser or purchasers thereof all of the Pledged Equity Interests so sold, and Holdings shall execute and deliver all necessary instruments of transfer, assignment, and conveyance, and shall take all other actions, in each case as the Collateral Agent may reasonably request in order to effect or confirm such transfer and to vest in the purchaser or purchasers thereof good and marketable title to the Pledged Equity Interests free and clear of all liens, claims, and encumbrances (other than liens or encumbrances, if any, that the purchaser has agreed to assume). Each purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of Holdings.
Section 7.04 — Application of Proceeds
The Proceeds of any sale or other disposition of the Collateral shall be applied by the Collateral Agent in the following order of priority:
(a) First, to the payment of all costs, fees, and expenses of such sale or disposition, including, without limitation, the reasonable and documented fees and expenses of counsel to the Collateral Agent (including Whitfield & Gage LLP), and all other costs and expenses incurred by the Collateral Agent in connection with the exercise of its rights and remedies under this Agreement;
(b) Second, to the payment of the Obligations in such order and priority as provided in the Credit Agreement (including the waterfall provisions set forth therein), until all Obligations have been indefeasibly paid in full in cash and all commitments under the Credit Agreement have been terminated; and
(c) Third, to the extent of any surplus remaining after the indefeasible payment in full in cash of all Obligations and the termination of all commitments, to Holdings or to whomsoever may be lawfully entitled thereto, or as a court of competent jurisdiction may direct.
The application of Proceeds in accordance with this Section 7.04 shall in all respects be subject to, and governed by, the intercreditor arrangements set forth in the First Lien/Unsecured Intercreditor Agreement, dated as of the date hereof, between Crescent Harbor Bank, N.A., in its capacity as First Lien Collateral Agent, and Pinnacle Trust Company, in its capacity as trustee for the holders of the Borrower's Two Hundred Fifty Million Dollars ($250,000,000) aggregate principal amount of 7.250% Senior Unsecured Notes due 2028. In the event of any conflict between the application of proceeds provisions of this Section 7.04 and the provisions of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall govern and control.
Section 7.05 — Retention of Collateral
The Collateral Agent may, in lieu of exercising the power of sale herein conferred upon it, propose to accept or retain the Pledged Equity Interests in full or partial satisfaction of the Obligations, to the extent and in the manner permitted by Sections 9-620 and 9-621 of the UCC. In the event the Collateral Agent elects to proceed in such manner, the Collateral Agent shall provide all notices required by the UCC and shall otherwise comply with all requirements of the UCC relating to acceptance or retention of collateral in satisfaction of obligations.
Section 7.06 — No Waiver; Cumulative Remedies
No failure or delay on the part of the Collateral Agent or any Secured Party in the exercise of any power, right, privilege, or remedy under this Agreement or any other Loan Document shall impair, prejudice, or constitute a waiver thereof, and no single or partial exercise of any such power, right, privilege, or remedy shall preclude any other or further exercise thereof or the exercise of any other power, right, privilege, or remedy. All rights, powers, privileges, and remedies of the Collateral Agent and the Secured Parties under this Agreement, the Credit Agreement, and each other Loan Document are cumulative and not exclusive of any rights, powers, privileges, or remedies provided by law, in equity, or otherwise.
Section 7.07 — Attorney-in-Fact
Holdings hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment is coupled with an interest and is irrevocable), with full authority, upon the occurrence and during the continuance of an Event of Default, in the name, place, and stead of Holdings or otherwise, to take any and all actions and to execute and deliver any and all documents and instruments that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) to execute and deliver in the name and on behalf of Holdings any and all instruments of transfer, assignment, endorsement, or conveyance with respect to the Pledged Equity Interests;
(b) to take any and all action necessary or desirable to register the Pledged Equity Interests in the name of the Collateral Agent or any nominee or transferee designated by the Collateral Agent, on the books and records of the Borrower;
(c) to receive and collect all dividends, distributions, interest, and other amounts payable in respect of the Pledged Equity Interests and to give receipt and acquittance therefor;
(d) to demand, commence, and prosecute any suits, actions, or proceedings at law or in equity in any court of competent jurisdiction to enforce any rights or interests in the Collateral; and
(e) to do and perform all such other acts and things as may be necessary or advisable to carry out the intent and purposes of this Agreement and to protect and enforce the rights and interests of the Collateral Agent and the Secured Parties in the Collateral.
Holdings hereby ratifies and confirms all that any such attorney-in-fact shall lawfully do or cause to be done by virtue of this power of attorney. This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any Obligation remains outstanding and unpaid.
ARTICLE VIII — TERMINATION; RELEASE
Section 8.01 — Termination
This Agreement and the security interest and lien created hereby shall terminate, and the Collateral shall be released from the security interest and lien created hereby, upon the earliest to occur of the following (such earliest date, the "Termination Date"):
(a) the indefeasible payment in full in cash of all Obligations (other than contingent indemnification obligations for which no claim has been asserted) under the Credit Agreement, the Guarantee Agreement, and each other Loan Document, and the termination or expiration of all commitments of the Lenders under the Credit Agreement (including the $1,400,000,000 Term Loan B Facility); or
(b) a release of Holdings' guarantee obligations under the Guarantee Agreement in accordance with the terms and conditions set forth therein and in the Credit Agreement (including, without limitation, any release in connection with a permitted disposition of Holdings' Equity Interests in the Borrower, to the extent such disposition is expressly permitted under the Credit Agreement).
For the avoidance of doubt, the stated maturity date of the Term Loan B Facility is March 28, 2032 (seven (7) years from the Closing Date).