SECURITY AGREEMENT
Execution Version
Dated as of March 28, 2025
among
NEXFORD INDUSTRIAL HOLDINGS INC., a Delaware corporation, as Borrower,
THE GUARANTORS FROM TIME TO TIME PARTY HERETO, as Grantors,
and
CRESCENT HARBOR BANK, N.A., as Collateral Agent
________________________________________
This Security Agreement is entered into in connection with 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, as Borrower, 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 from time to time party thereto.
________________________________________
Governed by and construed in accordance with the laws of the State of New York
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RECITALS
A. Nexford Industrial Holdings Inc. (the "Borrower"), a corporation duly organized and existing under the laws of the State of Delaware, has entered into the Credit Agreement, pursuant to which the Lenders have agreed, subject to the terms and conditions set forth therein, to extend credit to the Borrower in the form of a $1,400,000,000 senior secured Term Loan B facility (the "Term Loan B Facility"), the proceeds of which will be used to (i) refinance existing indebtedness of the Borrower and its subsidiaries, (ii) fund a portion of the purchase price in connection with certain permitted acquisitions, and (iii) pay fees and expenses incurred in connection therewith.
B. Granite Peak NIH Holdings, LLC (the "Holdings"), a Delaware limited liability company and the direct parent of the Borrower, and each direct and indirect domestic restricted subsidiary of the Borrower listed on Schedule I hereto (each, a "Subsidiary Grantor" and, together with Holdings and the Borrower, collectively, the "Grantors"), have agreed to guarantee the Obligations (as defined in the Credit Agreement) pursuant to that certain Guarantee Agreement dated as of March 28, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Guarantee Agreement"), among the Grantors and Crescent Harbor Bank, N.A., as Administrative Agent.
C. It is a condition precedent to the making of the initial Term Loans under the Credit Agreement that the Grantors shall have executed and delivered this Security Agreement to Crescent Harbor Bank, N.A. (in its capacity as collateral agent for the Secured Parties, the "Collateral Agent"), for the ratable benefit of the Secured Parties, to secure all Obligations of the Borrower and the Guarantors under the Credit Agreement, the Guarantee Agreement, and the other Loan Documents (as defined in the Credit Agreement).
D. Each Grantor will derive substantial direct and indirect benefit from the extensions of credit to the Borrower under the Credit Agreement, and it is in the best interest of each Grantor to execute and deliver this Security Agreement.
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, each Grantor and the Collateral Agent hereby agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Definitions.
Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement. In addition, the following terms shall have the following meanings for purposes of this Security Agreement:
"Account" means an "account" as defined in Article 9 of the UCC, and includes all accounts receivable, health-care-insurance receivables, and any right to payment of a monetary obligation, whether or not earned by performance, for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, for services rendered or to be rendered, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit or charge card or information contained on or for use with the card, or as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person authorized to operate or sponsor such game by a State or governmental unit of a State.
"Borrower" means Nexford Industrial Holdings Inc., a corporation duly organized and existing under the laws of the State of Delaware (EIN: 36-4178552; Delaware Secretary of State File No. 5765432), with its principal executive offices and chief executive office located at 1400 Industrial Parkway, Schaumburg, Illinois 60173, and its registered agent for service of process at c/o Penmark Industries, Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801.
"Chattel Paper" means "chattel paper" as defined in Article 9 of the UCC, including both "electronic chattel paper" and "tangible chattel paper" as each such term is defined in Article 9 of the UCC.
"Collateral" has the meaning set forth in Section 2.01 of this Security Agreement.
"Collateral Agent" means 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 Secured Parties under and pursuant to the Credit Agreement, and any successor collateral agent appointed in accordance with the terms thereof.
"Commercial Tort Claims" means "commercial tort claims" as defined in Article 9 of the UCC; provided that for purposes of Section 2.01 and the schedules hereto, Commercial Tort Claims shall be subject to the $2,500,000 threshold described in the definition of "Excluded Assets" and in Section 4.11.
"Deposit Account" means a "deposit account" as defined in Article 9 of the UCC, including any demand, time, savings, passbook, or similar account maintained with a depositary institution.
"Document" means a "document" as defined in Article 9 of the UCC, and includes all documents of title, bills of lading, dock warrants, dock receipts, warehouse receipts, and orders for the delivery of goods.
"Equipment" means "equipment" as defined in Article 9 of the UCC, and includes all machinery, machine tools, motors, generators, lathes, presses, dies, molds, jigs, fixtures, conveyors, computer hardware, vehicles (other than Excluded Assets), office equipment, furnishings, and all other tangible personal property (other than Inventory) used or acquired for use in the business of any Grantor, together with all embedded software, all accessions thereto, and all replacements and substitutions therefor, located at any of the Grantors' facilities, including the manufacturing and operating facilities at 1400 Industrial Parkway, Schaumburg, Illinois; 2750 Commerce Drive, Rockford, Illinois; 600 Manufacturers Row, Greenville, South Carolina; 9100 Westpark Industrial Boulevard, Houston, Texas; and all other locations identified on Schedule V hereto.
"Excluded Assets" means:
(i) motor vehicles and other assets subject to certificates of title where such motor vehicle has a book value below $250,000 per vehicle, to the extent that a security interest therein may be perfected only by compliance with the applicable certificate of title statute;
(ii) letter of credit rights having a face amount of less than $1,000,000 individually;
(iii) commercial tort claims where the amount in controversy is less than $2,500,000 individually;
(iv) any asset where the cost, burden, or consequence (including any adverse tax consequence) of obtaining or perfecting a security interest therein would be excessive in relation to the practical benefit afforded to the Secured Parties as reasonably determined by the Borrower in consultation with the Collateral Agent;
(v) any intent-to-use trademark applications filed with the United States Patent and Trademark Office to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law, including the Lanham Act (15 U.S.C. § 1060), provided that upon the filing of a "Statement of Use" or "Amendment to Allege Use" with respect to any such intent-to-use trademark application, such application shall automatically cease to be an Excluded Asset;
(vi) any lease, license, contract, instrument, or agreement of any Grantor to the extent that the grant of a security interest therein would constitute or result in a breach, termination, or violation of, or default under, the terms of such lease, license, contract, instrument, or agreement; provided that this exclusion shall not apply (A) to the extent that any applicable anti-assignment provision is rendered ineffective by Section 9-406, 9-407, 9-408, or 9-409 of the UCC (or any successor provision) or by any other applicable law (including the United States Bankruptcy Code), or (B) to the extent that any consent or waiver has been obtained that would permit the creation of a lien notwithstanding such restriction;
(vii) equity interests in any foreign subsidiary (other than 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 first-tier foreign subsidiaries held directly by CFC Holdcos, which are subject to the separate CFC Holdco Limited Pledge Agreement); and
(viii) any other asset expressly excluded from the definition of "Collateral" under the Credit Agreement or any other Loan Document.
For the avoidance of doubt, the term "Excluded Assets" shall be interpreted in a manner consistent with the terms of the Credit Agreement.
"General Intangibles" means "general intangibles" as defined in Article 9 of the UCC, and includes all payment intangibles, contract rights, options, customer lists, supplier lists, goodwill, rights to tax refunds and tax credits, claims for tax refunds, rights in litigation, guaranty claims, rights under insurance policies (to the extent not otherwise constituting separate Collateral), settlement rights, rights of indemnification, and all other intangible personal property of every kind and nature (other than Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Goods, Instruments, Investment Property, Letter-of-Credit Rights, Money, and Oil, Gas, and Other Minerals before extraction).
"Goods" means "goods" as defined in Article 9 of the UCC, including Inventory, Equipment, and fixtures.
"Grantors" means, collectively, the Borrower, Holdings, and each Subsidiary Grantor listed on Schedule I hereto, and each other Person that shall have executed and delivered a Joinder Agreement (in the form of Exhibit A hereto) after the date hereof, and their respective successors and assigns, and "Grantor" means any one of them individually.
"Holdings" means Granite Peak NIH Holdings, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (EIN: 85-3291047; Delaware Secretary of State File No. 7234891), with its principal office and registered agent at c/o Penmark Industries, Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801.
"Instrument" means an "instrument" as defined in Article 9 of the UCC, and includes all promissory notes, drafts, checks, certificated securities (to the extent constituting instruments), and other negotiable instruments, including all intercompany notes.
"intellectual Property" means, collectively, all Patents, Trademarks, Copyrights, Trade Secrets, Internet domain names, and all other intellectual property rights of every kind and nature now owned or hereafter acquired by any Grantor, together with (a) all registrations and applications for registration thereof, (b) all licenses and sublicenses granted with respect thereto, (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, (d) all rights to sue or otherwise recover for past, present, and future infringement, dilution, misappropriation, or violation thereof, and (e) all other rights of every kind and nature in connection with any of the foregoing; provided that the grant of a security interest in intellectual Property is subject to the separate intellectual Property Security Agreement dated as of March 28, 2025, among the Grantors and the Collateral Agent (the "IP Security Agreement").
"Inventory" means "inventory" as defined in Article 9 of the UCC, and includes all raw materials, work-in-process, finished goods, goods held for sale or lease, goods furnished or to be furnished under contracts of service, packaging materials, returned and repossessed goods, and all accessions to any of the foregoing and all documents of title representing any of the foregoing.
"Investment Property" means "investment property" as defined in Article 9 of the UCC, and includes all securities (whether certificated or uncertificated), securities accounts, securities entitlements, commodity contracts, commodity accounts, and all financial assets held in any securities account, including all equity interests in direct domestic subsidiaries (100%) and first-tier foreign subsidiaries (65% of voting equity and 100% of non-voting equity) held by CFC Holdcos, in each case subject to the separate Pledge Agreements.
"Letter-of-Credit Rights" means "letter-of-credit rights" as defined in Article 9 of the UCC, including any right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance; provided that letter of credit rights with a face amount individually less than $1,000,000 shall constitute Excluded Assets.
"Obligations" has the meaning ascribed to such term in the Credit Agreement, and includes all indebtedness, liabilities, and obligations of every kind and description of the Borrower and the Guarantors to the Secured Parties under or in connection with the Credit Agreement, any Notes (if any) issued thereunder, the Guarantee Agreement, this Security Agreement, and each other Loan Document, whether now existing or hereafter arising, direct or indirect, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law, or otherwise, and including all principal, interest (including interest accruing after the filing of a petition in bankruptcy or insolvency, whether or not such interest is an allowed claim in such proceeding), fees, premiums, charges, expenses, reimbursement obligations, indemnification obligations, and all other amounts payable by the Borrower or any Guarantor to any Secured Party.
"Pledged Collateral" means all equity interests and intercompany notes pledged by the Grantors as collateral security for the Obligations, which are covered under the separate Holdings Pledge Agreement (pursuant to which Granite Peak NIH Holdings, LLC has pledged 100% of its equity interests in the Borrower), the Borrower Pledge Agreement (pursuant to which the Borrower has pledged 100% of its equity interests in its direct domestic subsidiaries), the Subsidiary Pledge Agreements (executed by each of the ten Subsidiary Grantors), and the CFC Holdco Limited Pledge Agreement (pursuant to which Nexford International Holdings, Inc. has pledged 65% of the voting equity interests and 100% of the non-voting equity interests in Nexford Canada Holdings ULC), in each case dated as of March 28, 2025.
"Proceeds" means "proceeds" as defined in Article 9 of the UCC, and includes all cash proceeds, non-cash proceeds, insurance proceeds, condemnation proceeds, indemnity payments, and all other amounts received or receivable on account of or in connection with any Collateral, including (a) all proceeds of the sale, exchange, collection, or other disposition of any Collateral, (b) all amounts paid or payable under any policy of insurance covering any Collateral, (c) any and all payments (in any form whatsoever) made or due and payable in connection with any requisition, confiscation, condemnation, seizure, or forfeiture of all or any part of the Collateral, and (d) all proceeds of Proceeds.
"Secured Parties" means, collectively, the Collateral Agent, the Administrative Agent, and each Lender (including each Issuing Bank and the Swingline Lender, if applicable), in each case as defined in the Credit Agreement, and their respective successors and assigns.
"Securities Account" means a "securities account" as defined in Article 8 of the UCC, including any account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.
"Security Interest" has the meaning set forth in Section 2.01 of this Security Agreement.
"Subsidiary Grantors" means those entities listed on Schedule I hereto under the heading "Subsidiary Grantors," and any additional domestic restricted subsidiary of the Borrower that becomes a party hereto by executing and delivering a Joinder Agreement in the form of Exhibit A hereto, and "Subsidiary Grantor" means any one of them individually.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, "UCC" means 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, effect of perfection or non-perfection, or priority.
Section 1.02 — UCC Terms.
All terms defined in the UCC and used but not otherwise defined herein shall have the respective meanings set forth in the UCC. To the extent that the definition of any category of Collateral is modified or expanded by any amendment, revision, or other modification to the UCC after the date hereof, such modified or expanded definition shall automatically apply to this Security Agreement and the Collateral described herein without any further action by any party, and this Security Agreement shall be deemed amended to incorporate such modified or expanded definition.
Section 1.03 — Rules of Interpretation.
(a) References herein to the Credit Agreement, the Guarantee Agreement, or any other Loan Document shall include all amendments, restatements, extensions, supplements, modifications, renewals, replacements, refinancings, or other changes thereto from time to time in accordance with the terms thereof.
(b) Unless the context otherwise requires, references to "Sections," "Articles," "Schedules," and "Exhibits" are to Sections and Articles of, and Schedules and Exhibits to, this Security Agreement.
(c) The words "hereof," "herein," "hereunder," and words of similar import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision hereof.
(d) The word "including" (and its derivatives) means "including, without limitation."
(e) All references to the singular include the plural and vice versa, and references to any gender include references to every other gender, unless the context otherwise requires.
(f) The Article, Section, Schedule, and Exhibit headings contained in this Security Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Security Agreement.
(g) Any reference to any statute, regulation, or rule shall be deemed to include all amendments thereto, all successor statutes, regulations, and rules, and all published interpretive guidance with respect thereto.
ARTICLE II — GRANT OF SECURITY INTEREST
Section 2.01 — Grant.
Each Grantor hereby unconditionally and irrevocably grants, pledges, hypothecates, and assigns to the Collateral Agent, for the ratable benefit of the Secured Parties, a continuing first-priority security interest (the "Security Interest") in all of such Grantor's right, title, and interest in, to, and under the following property, in each case whether now owned or existing or hereafter acquired or arising, and wherever located (all of which is collectively referred to herein as the "Collateral"):
(a) All Accounts, including all accounts receivable, all rights to payment for goods sold, leased, licensed, assigned, or otherwise disposed of, and all rights to payment for services rendered or to be rendered, in each case whether or not such right to payment has been earned by performance;
(b) All Chattel Paper, including all electronic chattel paper and all tangible chattel paper, and all rights arising therefrom;
(c) All Deposit Accounts, including, without limitation, all deposit accounts maintained at Crescent Harbor Bank, N.A. and all operating accounts maintained at Redstone National Bank (including accounts ending in -4471, -4472, and -6633), together with all funds on deposit therein and all certificates and instruments, if any, from time to time representing or evidencing such deposit accounts, in each case subject to Deposit Account Control Agreements to be executed on or prior to the date hereof (or within such time periods as otherwise permitted hereunder or under the Credit Agreement);
(d) All Documents, including all documents of title, bills of lading, dock warrants, dock receipts, warehouse receipts, and orders for the delivery of goods;
(e) All Equipment, including all machinery, machine tools, lathes, presses, dies, molds, jigs, manufacturing equipment, material handling equipment, motors, generators, compressors, pumps, heating and cooling systems, forklifts, conveyors, fixtures, furniture, computer hardware and peripherals, telecommunications equipment, laboratory instruments, vehicles (other than Excluded Assets), and all other tangible personal property (other than Inventory) used or acquired for use in the business of such Grantor, together with all embedded software, accessories, parts, and tools, and all accessions, replacements, and substitutions therefor, located at any of such Grantor's facilities, including the facilities located at:
(i) 1400 Industrial Parkway, Schaumburg, Illinois 60173;
(ii) 2750 Commerce Drive, Rockford, Illinois 61101;
(iii) 600 Manufacturers Row, Greenville, South Carolina 29607;
(iv) 9100 Westpark Industrial Boulevard, Houston, Texas 77063; and
(v) all other locations identified on Schedule V hereto;
(f) All General Intangibles, including all payment intangibles, contract rights, rights under warranties, indemnification agreements, insurance policies, options, customer lists, supplier lists, goodwill, rights to tax refunds and tax credits, claims for tax refunds, rights to indemnification, settlement rights, and all other intangible personal property of every kind and nature;
(g) All Goods, including all Inventory, Equipment, and fixtures;
(h) All Instruments, including all promissory notes, drafts, checks, and other negotiable and non-negotiable instruments, including all intercompany promissory notes;
(i) All intellectual Property, including all patents (including patents pending), trademarks (including applications and registrations), service marks, trade names, copyrights (including registrations and applications), trade secrets, proprietary technology, know-how, domain names, and all related licenses, royalties, income, and rights, including all rights to sue for past, present, and future infringement, dilution, or misappropriation thereof (subject to the IP Security Agreement);
(j) All Inventory, including all raw materials, work-in-process, semi-finished goods, finished goods, goods held for sale or lease or to be furnished under contracts of service, packaging and shipping materials, returned and repossessed goods, and all documents of title representing any of the foregoing;
(k) All Investment Property, including all securities (whether certificated or uncertificated), securities accounts, securities entitlements, commodity contracts, and commodity accounts, and all equity interests in direct domestic subsidiaries (representing 100% of all issued and outstanding equity interests therein) and first-tier foreign subsidiaries (representing 65% of all issued and outstanding voting equity interests and 100% of all issued and outstanding non-voting equity interests therein) held by CFC Holdcos (subject to the separate Pledge Agreements);
(l) All Letter-of-Credit Rights, to the extent not constituting Excluded Assets, including all rights to payment or performance under any letter of credit;
(m) All Money, including all cash, currency, and funds, in whatever form;
(n) All Securities Accounts, including all securities accounts maintained by or on behalf of any Grantor, together with all financial assets credited thereto and all security entitlements with respect thereto, subject to Securities Account Control Agreements;
(o) All Commercial Tort Claims to the extent that the amount in controversy exceeds $2,500,000 individually, including those identified on Schedule IV hereto and any commercial tort claims hereafter identified in accordance with Section 4.11;
(p) All Supporting Obligations, including all letters of credit, guarantees, suretyship agreements, and other obligations that support the payment or performance of any of the foregoing Collateral;
(q) All Books and Records relating to any of the foregoing Collateral, including all ledgers, correspondence, computer programs, tapes, discs, and other data processing software, and all related general intangibles, to the extent related to the Collateral;
(r) All Proceeds of any and all of the foregoing Collateral, including all cash and non-cash proceeds, insurance proceeds, condemnation proceeds and awards, and all other amounts received or receivable from any sale, exchange, collection, or other disposition of any of the foregoing; and
(s) All accessions to, substitutions for, replacements of, and additions and improvements to any and all of the foregoing Collateral, howsoever any Grantor's interest therein may arise or appear (whether by ownership, security interest, claim, or otherwise).
The foregoing grant of a security interest is made to secure the prompt and complete payment, performance, and observance of all Obligations.
Section 2.02 — Excluded Assets.
Notwithstanding the foregoing, the Collateral shall not include any Excluded Assets. Specifically, the Collateral shall not include:
(a) motor vehicles and other assets subject to certificates of title where such motor vehicle has a book value below $250,000 per vehicle, to the extent that a security interest therein can only be perfected by compliance with the applicable certificate of title statute;
(b) letter of credit rights having a face amount individually less than $1,000,000;
(c) commercial tort claims where the amount in controversy is individually less than $2,500,000;
(d) any asset where the cost, burden, or other consequence (including any adverse tax consequence) of obtaining or perfecting a security interest therein would be excessive in relation to the practical benefit afforded to the Secured Parties, as reasonably determined by the Borrower in consultation with the Collateral Agent;
(e) any intent-to-use trademark applications filed with the United States Patent and Trademark Office to the extent, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability thereof under applicable federal law;
(f) any lease, license, contract, instrument, or agreement of any Grantor to the extent that the grant of a security interest therein would constitute or result in a breach, termination, or violation of, or default under, the terms thereof; provided that this exclusion shall not apply to the extent that any applicable anti-assignment provision is rendered ineffective by Section 9-406, 9-407, 9-408, or 9-409 of the UCC (or any successor provision thereof) or by any other applicable law;
(g) equity interests in any foreign subsidiary, other than 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 each first-tier foreign subsidiary that is held directly by a CFC Holdco, which equity interests are separately pledged pursuant to the CFC Holdco Limited Pledge Agreement; and
(h) any other asset or property expressly excluded from the collateral package under the Credit Agreement or any other Loan Document.
If an asset that would otherwise constitute Collateral ceases to be an Excluded Asset (including, without limitation, upon the filing of a Statement of Use with respect to an intent-to-use trademark application or the lapse of an anti-assignment restriction), such asset shall automatically, without further action by any party, be deemed to constitute Collateral hereunder.
Section 2.03 — Security Interest in Owned Real Property.
(a) The parties hereto acknowledge that owned real property of the Grantors with a fair market value exceeding $10,000,000 per parcel is subject to separate Mortgages, Deeds of Trust, Security Agreements, Assignments of Leases and Rents, and Fixture Filings (collectively, the "Mortgages") to be executed and delivered by the applicable Grantor in favor of the Collateral Agent, for the ratable benefit of the Secured Parties. The Mortgages are to be delivered as post-closing deliverables no later than April 30, 2025, in accordance with the terms of the Credit Agreement.
(b) The following four owned real properties are subject to the Mortgages:
(i) 1400 Industrial Parkway, Schaumburg, Illinois 60173 — appraised value: $85,000,000; Mortgage to be recorded with the Cook County Recorder of Deeds, Cook County, Illinois;
(ii) 2750 Commerce Drive, Rockford, Illinois 61101 — appraised value: $42,000,000; Mortgage to be recorded with the Winnebago County Recorder, Winnebago County, Illinois;
(iii) 600 Manufacturers Row, Greenville, South Carolina 29607 — appraised value: $38,000,000; Mortgage to be recorded with the Greenville County Register of Deeds, Greenville County, South Carolina; and
(iv) 9100 Westpark Industrial Boulevard, Houston, Texas 77063 — appraised value: $28,000,000; Deed of Trust to be recorded with the Harris County Clerk, Harris County, Texas.
The aggregate appraised value of the four mortgaged real properties is $193,000,000.
(c) For the avoidance of doubt, this Security Agreement covers all fixtures located at such mortgaged properties to the extent such fixtures constitute personal property Collateral under the UCC. UCC fixture filings may be made in the applicable real property records as described in Section 5.05.
Section 2.04 — Pledged Equity and Intercompany Notes.
(a) The parties hereto acknowledge that the equity interests in the Borrower and its direct and indirect domestic and foreign subsidiaries are subject to separate pledge agreements, as follows:
(i) Holdings Pledge Agreement — Granite Peak NIH Holdings, LLC, as pledgor, has pledged to the Collateral Agent 100% of all issued and outstanding equity interests in Nexford Industrial Holdings Inc.;
(ii) Borrower Pledge Agreement — Nexford Industrial Holdings Inc., as pledgor, has pledged to the Collateral Agent 100% of all issued and outstanding equity interests in each of its direct domestic subsidiaries;
(iii) Subsidiary Pledge Agreements — each of the ten Subsidiary Grantors, as pledgor, has pledged to the Collateral Agent 100% of all issued and outstanding equity interests in each of its respective direct domestic subsidiaries (to the extent applicable); and
(iv) CFC Holdco Limited Pledge Agreement — Nexford International Holdings, Inc. (a CFC Holdco), as pledgor, has pledged to the Collateral Agent 65% of all issued and outstanding voting equity interests and 100% of all issued and outstanding non-voting equity interests in Nexford Canada Holdings ULC, a British Columbia unlimited liability company.
(b) All intercompany promissory notes evidencing indebtedness owed by any Grantor to any other Grantor (or by any subsidiary to any Grantor) are pledged under this Security Agreement and shall be endorsed in blank (or to the order of the Collateral Agent) and delivered to the Collateral Agent (or its designee) in accordance with Section 5.03.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to the Collateral Agent and the Secured Parties as follows:
Section 3.01 — Title and Authority.
(a) Each Grantor is the sole legal and beneficial owner of its Collateral, free and clear of all liens, encumbrances, security interests, claims, options, charges, and other restrictions of every kind and nature, except for (i) the Security Interest created by this Security Agreement, (ii) Permitted Liens (as defined in the Credit Agreement), and (iii) liens in favor of Atlas Meridian Bank, N.A. under the Existing Credit Agreement (as defined below), which liens will be released on the date hereof upon the repayment in full of all obligations under the Existing Credit Agreement.
(b) Each Grantor has full corporate, limited liability company, or other organizational power and authority, as applicable, to own, hold, and dispose of its Collateral and to grant the Security Interest in its Collateral to the Collateral Agent as contemplated hereby, and has taken all necessary organizational action to authorize the execution, delivery, and performance of this Security Agreement and the grant of the Security Interest.
Section 3.02 — Enforceability.
This Security Agreement has been duly executed and delivered by each Grantor and constitutes the legal, valid, and binding obligation of each Grantor, enforceable against each Grantor in accordance with its terms, except as enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws affecting the enforcement of creditors' rights generally and (b) general equitable principles (whether enforcement is sought by proceedings in equity or at law).
Section 3.03 — Organizational Information.
(a) Each Grantor's exact legal name (as set forth in its certificate of incorporation, certificate of formation, or other organizational document filed with its jurisdiction of organization), entity type, jurisdiction of organization, organizational identification number, employer identification number (EIN), chief executive office and principal place of business, and registered agent is as set forth on Schedule I attached hereto. The information set forth on Schedule I is true, correct, and complete in all respects as of the date hereof.
(b) Without limiting the foregoing, the following Grantors are specifically identified as follows:
(i) Nexford Industrial Holdings Inc. — a corporation organized under the laws of the State of Delaware; Delaware Secretary of State File No. 5765432; EIN: 36-4178552; chief executive office: 1400 Industrial Parkway, Schaumburg, Illinois 60173; registered agent: Penmark Industries, Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801.
(ii) Granite Peak NIH Holdings, LLC — a limited liability company organized under the laws of the State of Delaware; Delaware Secretary of State File No. 7234891; EIN: 85-3291047; principal office: c/o Penmark Industries, Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801; registered agent: Penmark Industries, at the same address.
(c) Each Subsidiary Grantor is identified with its legal name, entity type, jurisdiction of organization, and other organizational details on Schedule I hereto, including:
(i) Nexford Precision Components, Inc. — a Delaware corporation, with principal offices at 2750 Commerce Drive, Rockford, Illinois 61101;
(ii) Nexford Engineered Systems, LLC — a Delaware limited liability company, with principal offices at 600 Manufacturers Row, Greenville, South Carolina 29607;
(iii) Nexford Coatings & Surface Technologies, Inc. — a Delaware corporation, with principal offices at 9100 Westpark Industrial Boulevard, Houston, Texas 77063;
(iv) Nexford Manufacturing Services, LLC — an Illinois limited liability company, with principal offices at 1400 Industrial Parkway, Schaumburg, Illinois 60173;
(v) Nexford Properties, LLC — a Delaware limited liability company, with registered office at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801;
(vi) Nexford International Holdings, Inc. — a Delaware corporation (CFC Holdco), with registered office at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801;
(vii) Clearfield Tool & Die, Inc. — a Pennsylvania corporation, with principal offices at 175 Clearfield Avenue, Clearfield, Pennsylvania 16830;
(viii) Summit Industrial Fabrication Co. — a South Carolina corporation, with principal offices at 820 Summit Drive, Spartanburg, South Carolina 29303;
(ix) Ridgepoint Specialty Coatings, LLC — a Texas limited liability company, with principal offices at 9100 Westpark Industrial Boulevard, Houston, Texas 77063; and
(x) Lakeshore Precision Engineering, Inc. — a Michigan corporation, with principal offices at 3200 Lakeshore Boulevard, Muskegon, Michigan 49441.
(d) No Grantor has, during the five years preceding the date hereof, been known by any legal name other than its current legal name as set forth on Schedule I, or been the subject of any merger, consolidation, or other organizational change, except as disclosed on Schedule I.
Section 3.04 — No Conflicts.
The execution and delivery of this Security Agreement by each Grantor, the performance by each Grantor of its obligations hereunder, and the grant by each Grantor of the Security Interest in its Collateral do not and will not (a) violate any provision of any law, statute, rule, or regulation applicable to any Grantor, or any order, judgment, injunction, or decree of any court, arbitrator, or governmental authority binding upon any Grantor, (b) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under the certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, partnership agreement, or other organizational documents of any Grantor, or (c) result in a breach of, constitute a default under, require any consent under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any material agreement, contract, lease, license, instrument, or other arrangement to which any Grantor is a party or by which any Grantor or any of its properties or assets is bound.
Section 3.05 — No Prior Security Interests.
(a) Except for (i) Permitted Liens (as defined in the Credit Agreement) and (ii) existing liens and security interests in favor of Atlas Meridian Bank, N.A., as collateral agent, created pursuant to the security agreement dated as of June 14, 2019, as amended (the "Existing Security Agreement"), in connection with that certain Credit Agreement dated as of June 14, 2019, as amended (the "Existing Credit Agreement"), among the Borrower, the guarantors party thereto, and Atlas Meridian Bank, N.A., as administrative agent and collateral agent, no effective financing statement, security agreement, mortgage, deed of trust, or similar lien instrument covering all or any part of the Collateral has been filed, recorded, or is of record in any public office or jurisdiction.
(b) All existing liens and security interests in favor of Atlas Meridian Bank, N.A. under the Existing Security Agreement will be released on the date hereof upon the repayment in full of all outstanding obligations under the Existing Credit Agreement, and UCC-3 termination statements will be filed in all applicable jurisdictions in accordance with Section 5.06 of this Security Agreement.
Section 3.06 — Accounts and Inventory.
(a) Each Account constituting Collateral represents a bona fide and legally enforceable obligation of the applicable account debtor for goods sold, leased, or otherwise disposed of, or for services rendered, in the ordinary course of business. To each Grantor's knowledge, each account debtor is solvent and able to perform its obligations in respect of such Account.
(b) All Inventory constituting Collateral is of good and merchantable quality, free from any known defects that would materially affect its value, and is not subject to any write-down below fair market value, except as reflected on the books and records of the applicable Grantor in accordance with GAAP.
Section 3.07 — Deposit Accounts and Securities Accounts.
(a) Schedule II hereto sets forth a true, complete, and correct list of all deposit accounts and securities accounts maintained by or on behalf of each Grantor as of the date hereof, including the financial institution at which each such account is maintained, the last four digits of each account number, and the type of account.
(b) Without limiting the generality of the foregoing, the Grantors maintain deposit accounts at Crescent Harbor Bank, N.A. (certain of which serve as concentration accounts) and operating accounts at Redstone National Bank (including accounts ending in -4471, -4472, and -6633, which are used for day-to-day operating disbursements and collections).
(c) Deposit Account Control Agreements (each a "DACA") and Securities Account Control Agreements (each a "SACA") have been, or will be on or prior to the date hereof (or within such longer period as permitted under the Credit Agreement), duly executed and delivered among the applicable Grantor, the applicable financial institution, and the Collateral Agent, covering each deposit account and securities account listed on Schedule II.
Section 3.08 — Intellectual Property.
(a) Schedule III hereto sets forth a true, complete, and correct list of all registered and applied-for patents, trademarks, service marks, and copyrights owned by each Grantor as of the date hereof, including the registration or application number, the filing date, the registration date (if applicable), and the jurisdiction of registration.
(b) The Grantors' material unregistered intellectual property, including trade secrets and unregistered copyrights, is included in the grant of the Security Interest pursuant to Section 2.01 but is not separately scheduled.
(c) Reference is made to the IP Security Agreement dated as of March 28, 2025, which provides for the recording of the Security Interest in intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.
Section 3.09 — Commercial Tort Claims.
Schedule IV hereto sets forth a true, complete, and correct list of all commercial tort claims of each Grantor as of the date hereof where the amount in controversy exceeds $2,500,000, including a brief description of each such claim, the court or forum in which such claim is pending (if applicable), and the estimated amount in controversy.
Section 3.10 — Location of Collateral.
(a) Schedule V hereto sets forth a true, complete, and correct list of all locations where tangible Collateral (including Equipment, Inventory, and other Goods) is maintained as of the date hereof.
(b) The Grantors maintain tangible Collateral at fourteen (14) manufacturing and operating facilities across North America, including the corporate headquarters, specifically including the following principal locations:
(i) 1400 Industrial Parkway, Schaumburg, Illinois 60173 (headquarters and primary manufacturing);
(ii) 2750 Commerce Drive, Rockford, Illinois 61101;
(iii) 600 Manufacturers Row, Greenville, South Carolina 29607;
(iv) 9100 Westpark Industrial Boulevard, Houston, Texas 77063;
(v) 175 Clearfield Avenue, Clearfield, Pennsylvania 16830;
(vi) 820 Summit Drive, Spartanburg, South Carolina 29303;
(vii) 3200 Lakeshore Boulevard, Muskegon, Michigan 49441; and
(viii) additional facilities of each operating subsidiary as set forth on Schedule V.
(c) Schedule V excludes the locations of Nexford Canada Holdings ULC and Nexford Canada Manufacturing, Inc., which are foreign subsidiaries and are not Grantors hereunder.
Section 3.11 — Compliance with Laws; Sanctions.
(a) Each Grantor is in compliance in all material respects with all laws, statutes, regulations, ordinances, rules, orders, judgments, decrees, and other requirements of any governmental authority applicable to such Grantor, its business, and its Collateral.
(b) No Grantor, nor any of its directors, officers, employees, or, to the knowledge of such Grantor, agents or affiliates, is a Sanctioned Person (as defined in the Credit Agreement). No Grantor has used, and no Grantor will use, any part of the Collateral, and no proceeds from the disposition of any Collateral will be used, directly or indirectly, 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 Laws (as defined in the Credit Agreement) or any Sanctions, including those administered and enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC"), the U.S. Department of State, the United Nations Security Council, the European Union, His Majesty's Treasury of the United Kingdom, or any other relevant sanctions authority.
ARTICLE IV — COVENANTS
Each Grantor hereby covenants and agrees with the Collateral Agent and the Secured Parties as follows:
Section 4.01 — Protection of Collateral Agent's Security Interest.
(a) Each Grantor shall take all actions necessary or reasonably requested by the Collateral Agent to maintain the Security Interest as a valid and perfected first-priority security interest in the Collateral (subject only to Permitted Liens that have priority by operation of law), including promptly executing and delivering all financing statements, continuation statements, amendments, instruments, and other documents that may be necessary or desirable.
(b) Each Grantor shall defend the Collateral against the claims, demands, and liens of all persons (other than the Secured Parties and holders of Permitted Liens) and shall keep the Collateral free and clear of all liens, security interests, encumbrances, and restrictions, except for the Security Interest and Permitted Liens.
Section 4.02 — Further Assurances.
Each Grantor shall, at its own cost and expense, promptly execute and deliver to the Collateral Agent such further instruments, documents, agreements, and assurances, and take such further actions, as the Collateral Agent may from time to time reasonably request in order to perfect, protect, maintain, and enforce the Security Interest and the rights and remedies of the Collateral Agent and the Secured Parties hereunder, including:
(a) the filing of UCC-1 financing statements and UCC-3 continuation statements (and any amendments thereto) in all applicable filing jurisdictions to perfect and maintain the perfection of the Security Interest;
(b) the execution and delivery of additional Deposit Account Control Agreements and Securities Account Control Agreements with respect to any new deposit accounts or securities accounts opened or maintained by any Grantor after the date hereof;
(c) the physical delivery to the Collateral Agent (or its designee) of all instruments (including promissory notes and intercompany notes), documents, and tangible chattel paper constituting Collateral, duly endorsed or accompanied by instruments of assignment and transfer, as appropriate;
(d) the execution and delivery of appropriate documents for recordation with the United States Patent and Trademark Office and the United States Copyright Office evidencing the Security Interest in registered intellectual Property;
(e) the execution and delivery of Mortgages with respect to any owned real property with a fair market value exceeding $10,000,000, in accordance with the post-closing deliverable deadline of April 30, 2025, as set forth in the Credit Agreement; and
(f) such other filings, registrations, recordings, or actions as may be necessary or appropriate under the laws of any applicable jurisdiction to perfect, protect, or maintain the Security Interest.
Section 4.03 — UCC Filings.
(a) Each Grantor hereby irrevocably authorizes the Collateral Agent (and its agents, designees, and counsel) to file UCC-1 financing statements (and UCC-3 amendments, continuations, and termination statements) in all relevant filing jurisdictions without the signature of such Grantor, to the fullest extent permitted by applicable law, describing the Collateral in such manner as the Collateral Agent may determine to be necessary or advisable, including describing the Collateral as "all assets" or "all personal property" of such Grantor or by any other description that reasonably approximates the description of the Collateral contained in Section 2.01.
(b) Initial UCC-1 financing statements shall be filed on or about March 28, 2025, in the following jurisdictions, naming the applicable Grantor as debtor and Crescent Harbor Bank, N.A. as secured party:
(i) Delaware — Office of the Secretary of State;
(ii) Illinois — Office of the Secretary of State;
(iii) Pennsylvania — Department of State;
(iv) South Carolina — Office of the Secretary of State;