CONFIDENTIAL — DRAFT 1 Prepared by Calderwood & Harkness LLP 425 Lexington Avenue, New York, New York 10017 C&H Matter No.: 1005-00001 Drafting Attorneys: Marcus Leung (Lead Associate), Sophie Tremblay (Working Associate) Reviewed by: Claudia Merritt (Responsible Partner)
SECURITY AGREEMENT
(Personal Property)
Dated as of March 10, 2025
among
NEXFORD INDUSTRIAL HOLDINGS INC., as Borrower,
GRANITE PEAK NIH HOLDINGS, LLC, as Holdings,
THE SUBSIDIARY GUARANTORS PARTY HERETO,
and
CRESCENT HARBOR BANK, N.A., as Collateral Agent
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, restated, supplemented, or otherwise modified from time to time, this "Security Agreement"), dated as of March 10, 2025, is entered into by and among NEXFORD INDUSTRIAL HOLDINGS INC., a Delaware corporation (the "Borrower"), GRANITE PEAK NIH HOLDINGS, LLC, a Delaware limited liability company ("Holdings"), each of the subsidiaries of the Borrower identified on Schedule I hereto (each, a "Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"; together with the Borrower and Holdings, collectively, the "Grantors" and each individually, a "Grantor"), and CRESCENT HARBOR BANK, N.A., a national banking association, in its capacity as Collateral Agent for the benefit of the Secured Parties (in such capacity, the "Collateral Agent").
RECITALS
WHEREAS, 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, have entered into or are concurrently entering into that certain Credit Agreement dated as of [●], 2025 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), pursuant to which, among other things, the Lenders have agreed to make available to the Borrower a senior secured Term Loan B facility in an aggregate principal amount of $1,400,000,000 (the "Term Loan B Facility"), on the terms and subject to the conditions set forth therein;
WHEREAS, Holdings and the Subsidiary Guarantors have entered into or are concurrently entering into that certain Guarantee Agreement dated as of [●], 2025 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the "Guarantee Agreement"), pursuant to which Holdings and the Subsidiary Guarantors have unconditionally guaranteed the payment and performance of all Obligations of the Borrower under the Credit Agreement and the other Loan Documents;
WHEREAS, it is a condition precedent to the making of the initial extensions of credit under the Credit Agreement that each Grantor execute and deliver this Security Agreement, granting a first-priority security interest in substantially all of its personal property assets to the Collateral Agent for the benefit of the Secured Parties;
WHEREAS, each Grantor is a direct or indirect subsidiary of Holdings and will derive substantial direct and indirect benefit from the extensions of credit made available to the Borrower under the Credit Agreement, and the Borrower and each other Grantor are members of an integrated group of related entities, and the successful operation and condition of each such entity is dependent on the continued successful performance of the functions of the integrated group as a whole; and
WHEREAS, each Grantor desires to grant a first-priority security interest in substantially all of its personal property to the Collateral Agent for the benefit of the Secured Parties, to secure the prompt and complete payment and performance of all Obligations arising under or in connection with the Credit Agreement, the Guarantee Agreement, and the other Loan Documents.
NOW, THEREFORE, in consideration of the premises and mutual covenants 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
Section 1.1 — Defined Terms
As used in this Security Agreement, the following terms shall have the meanings set forth below:
"Account" shall have the meaning ascribed to such term in Article 9 of the UCC.
"Account Debtor" shall have the meaning ascribed to such term in Article 9 of the UCC.
"Administrative Agent" shall mean Crescent Harbor Bank, N.A., a national banking association, in its capacity as administrative agent under the Credit Agreement, and its successors and assigns in such capacity.
"Borrower" shall mean Nexford Industrial Holdings Inc., a Delaware corporation, with Employer Identification Number (EIN) 36-4178552, Delaware Secretary of State File Number 5765432, having its chief executive office located at 1400 Industrial Parkway, Schaumburg, Illinois 60173, and having its registered agent in the State of Delaware at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801, and its successors and permitted assigns.
"Chattel Paper" shall have the meaning ascribed to such term in Article 9 of the UCC, and shall include both electronic chattel paper and tangible chattel paper, each as defined in Article 9 of the UCC.
"Collateral" shall have the meaning ascribed to such term in Section 2.1 of this Security Agreement and shall mean all personal property of each Grantor described in Section 2.1, subject to the exclusions set forth in Section 2.2.
"Collateral Agent" shall mean Crescent Harbor Bank, N.A., a national banking association, in its capacity as collateral agent for the benefit of the Secured Parties under the Credit Agreement, and its successors and assigns in such capacity.
"Commercial Tort Claim" shall have the meaning ascribed to such term in Article 9 of the UCC; provided that commercial tort claims with a reasonably estimated value of less than $2,500,000 individually shall constitute Excluded Assets and shall not be required to be included in the Collateral or identified on Schedule III hereto.
"Credit Agreement" shall mean that certain Credit Agreement dated as of [●], 2025, among the Borrower, the Guarantors party thereto, the Administrative Agent, the Collateral Agent, the Joint Lead Arrangers, and the Lenders party thereto, providing for a $1,400,000,000 senior secured Term Loan B Facility, as amended, restated, amended and restated, supplemented, refinanced, replaced, or otherwise modified from time to time, which Credit Agreement is governed by the laws of the State of New York.
"Deposit Account" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all deposit accounts maintained by any Grantor at Crescent Harbor Bank, N.A. and all operating accounts maintained by Nexford Industrial Holdings Inc. at Redstone National Bank (including, without limitation, accounts ending in -4471, -4472, and -6633), each of which shall be subject to a deposit account control agreement in accordance with Section 3.2 hereof.
"Document" shall have the meaning ascribed to such term in Article 9 of the UCC.
"Equipment" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all machinery, manufacturing equipment, tools, dies, molds, jigs, fixtures, vehicles (other than motor vehicles constituting Excluded Assets), computers, furniture, furnishings, and other tangible personal property (other than Inventory) of each Grantor, in each case whether now owned or hereafter acquired and wherever located; provided that motor vehicles with a net book value of less than $250,000 per vehicle shall constitute Excluded Assets.
"Excluded Assets" shall mean, collectively:
(a) motor vehicles and other assets subject to certificates of title, in each case with a net book value of less than $250,000 per vehicle or per asset;
(b) letter of credit rights with a face amount or value of less than $1,000,000;
(c) commercial tort claims with a reasonably estimated value of less than $2,500,000 individually;
(d) any asset as to which the Collateral Agent and the Borrower reasonably determine that the cost of obtaining or perfecting a security interest therein or thereon is excessive in relation to the value of the security to be afforded thereby to the Secured Parties;
(e) any lease, license, contract, property right, or other agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license, contract, property right, or other agreement, or would create a right of termination in favor of any other party thereto (other than any Grantor), in each case after giving effect to the applicable anti-assignment override provisions of the UCC (including Sections 9-406, 9-407, 9-408, and 9-409 thereof) and any other applicable law;
(f) equity interests in any subsidiary of the Borrower (which equity interests are covered by separate Pledge Agreements, including the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, and the CFC Holdco Limited Pledge Agreement, the latter covering sixty-five percent (65%) of the voting equity interests and one hundred percent (100%) of the non-voting equity interests of first-tier foreign subsidiaries of Nexford International Holdings, Inc.); provided that Proceeds of any disposition of such equity interests shall not be Excluded Assets and shall constitute Collateral hereunder to the extent not otherwise falling within the exclusions set forth in this definition;
(g) intent-to-use trademark applications filed with the United States Patent and Trademark Office (the "USPTO"), but only prior to the filing of a "statement of use" or an "amendment to allege use" with respect thereto, and only to the extent that the grant of a security interest therein prior to such filing would impair the validity or enforceability of such trademark application under applicable federal trademark law (including Section 10 of the Lanham Act, 15 U.S.C. § 1060);
(h) any governmental license, governmental permit, franchise, charter, or authorization issued by any governmental authority, in each case to the extent that such license, permit, franchise, charter, or authorization by its terms or by applicable law prohibits assignment, pledge, or the grant of a security interest therein;
(i) any property to the extent and for so long as the pledge thereof or granting of a security interest therein is prohibited by applicable law, rule, or regulation (after giving effect to the applicable provisions of the UCC, including Sections 9-406, 9-407, 9-408, and 9-409 thereof, and other applicable law); and
(j) all real property interests and fixtures attached or appurtenant to real property (which interests are subject to separate Mortgages to the extent required under the Credit Agreement).
Notwithstanding the foregoing, "Excluded Assets" shall not include any Proceeds, substitutions, or replacements of any Excluded Assets described above (unless such Proceeds, substitutions, or replacements would independently constitute Excluded Assets under one or more of clauses (a) through (j) above). The Grantors and the Collateral Agent shall use commercially reasonable efforts to cause each exclusion set forth in this definition to be as narrow in scope as possible consistent with its intended purpose.
"General Intangible" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all payment intangibles, software, customer lists, customer relationships, supplier relationships, tax refund claims, rights under contracts and other agreements, choses in action, and all other intangible personal property of each Grantor, in each case whether now owned or hereafter acquired.
"Goods" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all Inventory, Equipment, fixtures (to the extent not constituting Excluded Assets), and farm products (if any) of each Grantor.
"Grantor" and "Grantors" shall have the meanings set forth in the preamble to this Security Agreement. The individual Grantors, together with their respective organizational information, are identified on Schedule I attached hereto.
"Holdings" shall mean Granite Peak NIH Holdings, LLC, a Delaware limited liability company, with Employer Identification Number (EIN) 85-3291047, Delaware Secretary of State File Number 7234891, having its address at c/o Penmark Industries, 1209 Orange Street, Wilmington, Delaware 19801, and its successors and permitted assigns.
"Instrument" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all promissory notes (including the Intercompany Note), drafts, and other negotiable and non-negotiable instruments of each Grantor.
"intellectual Property" shall mean all patents, patent applications, patentable inventions, trademarks, trademark registrations, trademark applications, service marks, service mark registrations, trade names, trade dress, copyrights, copyright registrations, copyright applications, domain names, trade secrets, proprietary information, know-how, and all other intellectual property rights of each Grantor, in each case whether now owned or hereafter acquired, together with (a) all licenses, sublicenses, and rights of any nature whatsoever in and to all of the foregoing, (b) all goodwill associated therewith, (c) all income, royalties, damages, and payments now or hereafter due and/or payable under or with respect thereto, including damages and payments for past, present, or future infringement thereof, and (d) all rights to sue or otherwise recover for past, present, or future infringement, dilution, or misappropriation thereof. For the avoidance of doubt, the intellectual Property is subject to a separate intellectual Property Security Agreement dated as of [●], 2025 (the "Intellectual Property Security Agreement"), but is also included in the Collateral under this Security Agreement to the extent constituting General Intangibles or other categories of personal property described in Section 2.1.
"Intercompany Note" shall mean the intercompany promissory note or notes issued by the Borrower to or in favor of any of its subsidiaries, as supplemented, amended, or replaced from time to time, which promissory notes have been endorsed in blank and pledged and delivered to the Collateral Agent in accordance with Section 3.4 hereof.
"Intercreditor Agreement" shall mean that certain First Lien/Unsecured Intercreditor Agreement dated as of [●], 2025, among Crescent Harbor Bank, N.A., as First Lien Collateral Agent, Pinnacle Trust Company, as trustee for the holders of the $250,000,000 7.250% Senior Unsecured Notes due 2028 (the "Unsecured Notes"), and Nexford Industrial Holdings Inc., as acknowledged and agreed by each other Grantor, as amended, restated, amended and restated, supplemented, or otherwise modified from time to time.
"Inventory" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, 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, supplies, and all other inventory of each Grantor, in each case whether now owned or hereafter acquired and wherever located.
"Investment Property" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all securities, securities accounts, securities entitlements, commodity contracts, and commodity accounts of each Grantor; provided that equity interests in subsidiaries that are pledged under the separate Pledge Agreements shall not constitute Collateral under this Security Agreement (but are referenced herein for cross-reference purposes only).
"Letter-of-Credit Right" shall have the meaning ascribed to such term in Article 9 of the UCC; provided that letter-of-credit rights with a face amount or value of less than $1,000,000 shall constitute Excluded Assets.
"Lien" shall have the meaning ascribed to such term in the Credit Agreement.
"Loan Documents" shall mean, collectively, the Credit Agreement, the Guarantee Agreement, this Security Agreement, the Pledge Agreements (including the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, and the CFC Holdco Limited Pledge Agreement), the intellectual Property Security Agreement, the Intercreditor Agreement, the Mortgages, each deposit account control agreement and securities account control agreement executed in connection herewith, and all other agreements, instruments, documents, and certificates executed and delivered by or on behalf of the Borrower, Holdings, or any Subsidiary Guarantor in connection with or pursuant to any of the foregoing, in each case as amended, restated, amended and restated, supplemented, or otherwise modified from time to time.
"Obligations" shall mean all obligations of the Borrower and each Guarantor arising under or in connection with the Loan Documents, including, without limitation, (a) all principal of and interest (including interest accruing after the commencement of any proceeding under any Debtor Relief Law, whether or not such interest is an allowed claim in such proceeding) on the Term Loans, (b) all fees, commissions, charges, costs, and expenses (including reasonable and documented attorneys' fees and expenses), (c) all indemnification obligations, (d) all reimbursement obligations, and (e) all other amounts payable by the Borrower or any Guarantor under any Loan Document, in each case whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising. For the avoidance of doubt, upon the occurrence and during the continuance of an Event of Default, all Obligations shall bear interest at the default rate specified in the Credit Agreement, which default rate is equal to an additional two hundred (200) basis points above the otherwise applicable interest rate.
"Pledged Collateral" shall mean the equity interests in the subsidiaries of the Borrower and Holdings that are subject to the separate Pledge Agreements, including the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, and the CFC Holdco Limited Pledge Agreement. The Pledged Collateral is referenced herein for cross-reference purposes only; equity interests are pledged, and the security interest therein is granted and perfected, under and pursuant to the applicable Pledge Agreements and not under this Security Agreement.
"Proceeds" shall have the meaning ascribed to such term in Article 9 of the UCC and shall include, without limitation, all identifiable proceeds of all Collateral (including all insurance proceeds and condemnation awards), whatever form such proceeds may take (whether cash, negotiable instruments, rights to payment, or otherwise), and all proceeds of proceeds.
"Secured Parties" shall mean, collectively, the Collateral Agent, the Administrative Agent, and the Lenders from time to time party to the Credit Agreement, and their respective successors and assigns.
"Securities Account" shall have the meaning ascribed to such term in Article 8 of the UCC.
"Security Interest" shall mean the security interest granted by each Grantor to the Collateral Agent for the benefit of the Secured Parties pursuant to Article II of this Security Agreement.
"Subsidiary Guarantors" shall mean the entities listed on Schedule I attached hereto, consisting of the following: (1) Nexford Precision Components, Inc., a Delaware corporation; (2) Nexford Engineered Systems, LLC, a Delaware limited liability company; (3) Nexford Coatings & Surface Technologies, Inc., a Delaware corporation; (4) Nexford Manufacturing Services, LLC, an Illinois limited liability company; (5) Nexford Properties, LLC, a Delaware limited liability company; (6) Nexford International Holdings, Inc., a Delaware corporation (CFC holdco); (7) Clearfield Tool & Die, Inc., a Pennsylvania corporation; (8) Summit Industrial Fabrication Co., a South Carolina corporation; (9) Ridgepoint Specialty Coatings, LLC, a Texas limited liability company; and (10) Lakeshore Precision Engineering, Inc., a Michigan corporation, and, together with any additional subsidiary that becomes a party hereto by executing a Joinder Agreement in the form of Exhibit A, collectively, the "Subsidiary Guarantors" and each individually, a "Subsidiary Guarantor."
"Supporting Obligation" shall have the meaning ascribed to such term in Article 9 of the UCC.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if the perfection, the effect of perfection or non-perfection, or the priority of the 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" shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, or priority.
Section 1.2 — UCC Terms
All capitalized terms used herein and not otherwise defined herein shall, to the extent such terms are defined in Article 9 of the UCC, have the respective meanings ascribed to such terms therein. To the extent that a term used herein is defined in both Article 9 and in another Article of the UCC, the definition contained in Article 9 shall control for purposes of this Security Agreement unless the context clearly requires otherwise.
Section 1.3 — Credit Agreement Definitions
Unless otherwise defined herein, all capitalized terms used in this Security Agreement that are defined in the Credit Agreement shall have the respective meanings ascribed to such terms in the Credit Agreement. Such definitions are incorporated herein by reference as if fully set forth herein.
Section 1.4 — Rules of Construction
(a) References in this Security Agreement to "Sections," "Articles," "Schedules," and "Exhibits" shall be to Sections, Articles, Schedules, and Exhibits of this Security Agreement unless otherwise specifically provided.
(b) Section headings and captions contained in this Security Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Security Agreement.
(c) The use of the masculine, feminine, or neuter gender or the singular or plural form of words shall include, as appropriate, all other genders and numbers.
(d) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(e) References to any law, statute, rule, or regulation shall include all statutory and regulatory provisions amending, consolidating, replacing, supplementing, or interpreting such law, statute, rule, or regulation.
(f) Unless the context otherwise requires, all questions of construction and interpretation arising under this Security Agreement shall be resolved in accordance with the laws of the State of New York.
(g) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II — GRANT OF SECURITY INTEREST
Section 2.1 — Grant
Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a continuing security interest (the "Security Interest") in all of the following property of such Grantor, whether now owned or existing or hereafter acquired or arising and wherever located (all such property being collectively referred to as the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper, including all electronic chattel paper and tangible chattel paper;
(c) all Commercial Tort Claims, to the extent identified on Schedule III hereto (as supplemented from time to time in accordance with Section 5.11 hereof), and in each case having a reasonably estimated value in excess of $2,500,000;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles, including all payment intangibles, software, customer lists, customer relationships, supplier agreements, tax refund claims, and rights under contracts and other agreements;
(h) all Goods, including all Inventory, Equipment, fixtures (to the extent not constituting Excluded Assets), and farm products (if any);
(i) all Instruments, including all promissory notes (including the Intercompany Note and all other material intercompany notes);
(j) all intellectual Property, to the extent constituting personal property and to the extent such intellectual Property constitutes General Intangibles or any other category of personal property described in this Section 2.1 (subject to, and without limiting the separate grant under, the intellectual Property Security Agreement);
(k) all Inventory;
(l) all Investment Property, including all securities, securities accounts, securities entitlements, commodity contracts, and commodity accounts, but excluding equity interests pledged under the separate Pledge Agreements (which equity interests are referenced herein for cross-reference purposes only);
(m) all Letter-of-Credit Rights, to the extent the face amount or value thereof is equal to or greater than $1,000,000;
(n) all money, whether now owned or hereafter acquired, in the possession or under the control of any Grantor or the Collateral Agent;
(o) all Securities Accounts;
(p) all Supporting Obligations;
(q) all material intercompany notes, promissory notes, and other evidence of indebtedness issued by any subsidiary of the Borrower to or in favor of any Grantor;
(r) all books and records, ledgers, files, correspondence, and other documents pertaining to any of the foregoing Collateral, including all computer programs, disks, tapes, and related electronic data processing media and software relating thereto; and
(s) all Proceeds and products of any and all of the foregoing Collateral, in any form, including all cash and non-cash proceeds, all insurance proceeds (including business interruption and key-man life insurance proceeds) and condemnation awards, and all other amounts payable under any insurance policy or as a result of any condemnation, expropriation, or other taking of any of the foregoing Collateral, and all proceeds of proceeds.
The Security Interest is granted to secure the prompt and complete payment and performance of all Obligations arising under or in connection with the Credit Agreement, the Guarantee Agreement, and the other Loan Documents, as more fully described in Section 2.3 hereof. Each Grantor acknowledges and agrees that the Security Interest shall attach to all Collateral immediately upon the execution and delivery of this Security Agreement and, with respect to Collateral acquired after the date hereof, immediately upon such acquisition, in each case without the need for any further action by any Grantor or the Collateral Agent.
For the avoidance of doubt, and without limiting the generality of the foregoing, owned real property with a fair market value in excess of $10,000,000 is subject to separate Mortgages executed by the applicable Grantors in favor of the Collateral Agent for the benefit of the Secured Parties (which Mortgages cover four (4) properties with an aggregate appraised value of approximately $193,000,000, as described on Schedule II hereto) and is not covered by the Security Interest granted under this Security Agreement.
Section 2.2 — Excluded Assets
Notwithstanding the provisions of Section 2.1, the Collateral shall not include any of the following (collectively, the "Excluded Assets"):
(a) motor vehicles and other assets subject to certificates of title, in each case with a net book value of less than $250,000 per vehicle or per asset;
(b) letter-of-credit rights with a face amount or value of less than $1,000,000;
(c) commercial tort claims with a reasonably estimated value of less than $2,500,000 individually;
(d) any asset as to which the Collateral Agent and the Borrower reasonably determine that the cost of obtaining or perfecting a security interest therein or thereon (including any filing, recording, or registration fees, control agreement fees, appraisal costs, or other out-of-pocket expenses) is excessive in relation to the value of the security interest to be afforded thereby to the Secured Parties;
(e) any lease, license, contract, property right, or other agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license, contract, property right, or other agreement, or would give rise to a right of termination in favor of any other party thereto (other than any Grantor) pursuant to the terms thereof, but only to the extent that any such prohibition, restriction, or condition on assignment or pledging is not rendered ineffective by the provisions of the UCC (including Sections 9-406, 9-407, 9-408, and 9-409 thereof) or by any other applicable law or principles of equity; provided that, upon any such prohibition, restriction, or condition ceasing to be effective or applicable (whether by amendment, waiver, consent, or operation of law), the applicable asset shall automatically be deemed Collateral hereunder without further action by any party;
(f) equity interests in any subsidiary of the Borrower or Holdings (which equity interests are covered by separate Pledge Agreements); provided that the Proceeds of any disposition of such equity interests (including dividends and distributions received in respect thereof) shall not constitute Excluded Assets and shall constitute Collateral hereunder to the extent not otherwise falling within the exclusions set forth in this Section 2.2;
(g) intent-to-use trademark applications filed with the USPTO, but only prior to the filing of a "statement of use" or an "amendment to allege use" with respect thereto, and only to the extent that the grant of a security interest therein would impair the validity or enforceability of such trademark application under applicable federal trademark law (including Section 10 of the Lanham Act, 15 U.S.C. § 1060); provided that, upon the filing of such "statement of use" or "amendment to allege use," such trademark application shall automatically be deemed Collateral hereunder without further action by any party;
(h) any governmental license, governmental permit, franchise, charter, or governmental authorization issued by any governmental authority, in each case to the extent that such license, permit, franchise, charter, or authorization by its terms or by applicable law cannot be pledged, assigned, or encumbered without resulting in the revocation, termination, or invalidation thereof;
(i) any property to the extent and for so long as the pledge thereof or granting of a security interest therein is prohibited by applicable law, rule, or regulation (after giving effect to the applicable anti-assignment override provisions of the UCC and other applicable law); provided that, upon any such prohibition ceasing to be applicable (whether by amendment, repeal, or operation of law), such property shall automatically be deemed Collateral hereunder without further action by any party; and
(j) all real property interests (including fee and leasehold interests) and fixtures attached or appurtenant to real property, which interests are subject to separate Mortgages to the extent required under Section [●] of the Credit Agreement.
Notwithstanding the foregoing, the term "Excluded Assets" shall not include any Proceeds, substitutions, or replacements of any Excluded Assets unless such Proceeds, substitutions, or replacements would independently constitute Excluded Assets under one or more of clauses (a) through (j) above. The Grantors and the Collateral Agent shall use commercially reasonable efforts to cause each exclusion set forth in this Section 2.2 to be as narrow in scope as possible consistent with its intended purpose, and each Grantor shall take all reasonable steps to obtain any necessary consents or approvals to permit the inclusion of Excluded Assets in the Collateral to the extent reasonably requested by the Collateral Agent.
Section 2.3 — Security Interest Secures Obligations
The Security Interest granted pursuant to this Article II secures the prompt and complete payment and performance, when due (whether at stated maturity, by acceleration, or otherwise), of all Obligations, as defined in the Credit Agreement and as further described herein, including, without limitation:
(a) all principal amounts owing under the Term Loan B Facility;
(b) all interest (including post-petition interest, whether or not such interest is allowed as a claim in any proceeding under any Debtor Relief Law), at the applicable rate or, during the continuance of an Event of Default, at the default rate (being an additional two hundred (200) basis points above the otherwise applicable interest rate);
(c) all fees, commissions, charges, premiums, and other amounts payable by the Borrower or any Guarantor under the Credit Agreement or any other Loan Document;
(d) all costs and expenses (including all reasonable and documented fees, charges, and disbursements of counsel) payable by the Borrower or any Guarantor under the Credit Agreement or any other Loan Document;
(e) all indemnification obligations of the Borrower or any Guarantor under the Credit Agreement or any other Loan Document; and
(f) all other amounts of every nature and description owing by the Borrower or any Guarantor from time to time under or in connection with the Credit Agreement, the Guarantee Agreement, this Security Agreement, or any other Loan Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.
ARTICLE III — PERFECTION OF SECURITY INTEREST
Section 3.1 — UCC Financing Statements
(a) Each Grantor hereby authorizes the Collateral Agent to file in any filing office in any UCC jurisdiction one or more UCC-1 financing statements (and all amendments, continuation statements, and other filings related thereto) covering the Collateral, naming such Grantor as debtor and the Collateral Agent as secured party, in form and substance satisfactory to the Collateral Agent. Each Grantor further authorizes the Collateral Agent to file any such financing statement(s) describing the Collateral as "all assets" or "all personal property" of the applicable Grantor, or words of similar import, and each Grantor agrees that such description is sufficient for purposes of Article 9 of the UCC. Each Grantor ratifies and confirms the filing of any financing statements filed by the Collateral Agent prior to the date hereof.
(b) Without limiting the generality of the foregoing, the Collateral Agent is authorized to make the following UCC filings in the following jurisdictions:
(i) Delaware Secretary of State: UCC-1 financing statements naming each of Nexford Industrial Holdings Inc., Granite Peak NIH Holdings, LLC, Nexford Precision Components, Inc., Nexford Engineered Systems, LLC, Nexford Coatings & Surface Technologies, Inc., Nexford Properties, LLC, and Nexford International Holdings, Inc. as debtor;
(ii) Illinois Secretary of State: UCC-1 financing statement naming Nexford Manufacturing Services, LLC as debtor;
(iii) Pennsylvania Department of State: UCC-1 financing statement naming Clearfield Tool & Die, Inc. as debtor;
(iv) South Carolina Secretary of State: UCC-1 financing statement naming Summit Industrial Fabrication Co. as debtor;
(v) Texas Secretary of State: UCC-1 financing statement naming Ridgepoint Specialty Coatings, LLC as debtor; and
(vi) Michigan Department of State: UCC-1 financing statement naming Lakeshore Precision Engineering, Inc. as debtor.
A complete listing of UCC filing information for each Grantor is set forth on Schedule VI attached hereto.
(c) Each Grantor shall promptly notify the Collateral Agent in writing of any change in such Grantor's jurisdiction of organization or of any other event that may require the filing of additional or amended financing statements in any jurisdiction, and shall take all actions reasonably requested by the Collateral Agent to ensure the continued perfection and first-priority status of the Security Interest, including the authorization, preparation, and filing of new or amended UCC financing statements in the applicable jurisdictions.
Section 3.2 — Deposit Account Control Agreements
(a) Each Grantor shall, on or prior to the Closing Date (as defined in the Credit Agreement), deliver or cause to be delivered to the Collateral Agent duly executed deposit account control agreements (each, a "DACA") in form and substance reasonably satisfactory to the Collateral Agent, with respect to each deposit account maintained by any Grantor at any depository bank.
(b) With respect to deposit accounts maintained at Crescent Harbor Bank, N.A. (in its capacity as depository bank), the Collateral Agent acknowledges that, as the depository bank for such accounts, it shall have "control" (within the meaning of UCC Section 9-104) over such deposit accounts by virtue of this Security Agreement and the applicable deposit account documentation, without the need for a separate tri-party DACA. To the extent the Collateral Agent reasonably determines that a separate DACA is required to evidence its control, each Grantor shall promptly execute and deliver such agreement.
(c) With respect to Nexford Industrial Holdings Inc.'s operating accounts at Redstone National Bank (specifically, account ending in -4471 (operating account), account ending in -4472 (payroll account), and account ending in -6633 (concentration/sweep account)), each such account shall be subject to a tri-party DACA among the applicable Grantor, Redstone National Bank (as depository bank), and the Collateral Agent, to be executed and delivered on or prior to the Closing Date.
(d) Each DACA shall provide, among other things, that upon receipt of a notice of exclusive control from the Collateral Agent (which notice shall be delivered only following the occurrence and during the continuance of an Event of Default), the applicable depository bank shall comply exclusively with instructions originated by the Collateral Agent directing disposition of the funds in the applicable deposit account without further consent of the applicable Grantor.
Section 3.3 — Securities Account Control Agreements
(a) Each Grantor shall, on or prior to the Closing Date, deliver or cause to be delivered to the Collateral Agent duly executed securities account control agreements (each, a "SACA") in form and substance reasonably satisfactory to the Collateral Agent, with respect to each securities account maintained by any Grantor with any securities intermediary.
(b) Each SACA shall provide that the Collateral Agent shall have "control" over such securities account within the meaning of UCC Section 8-106, including the right, following the occurrence and during the continuance of an Event of Default, to direct the disposition of financial assets credited to such securities account without further consent of the applicable Grantor.
(c) Each Grantor shall take all actions necessary or reasonably requested by the Collateral Agent to ensure that the Collateral Agent has a perfected, first-priority security interest in all securities accounts and the financial assets credited thereto.
Section 3.4 — Delivery of Instruments and Tangible Chattel Paper
(a) Each Grantor shall promptly deliver to the Collateral Agent, or cause to be delivered to the Collateral Agent, all Instruments (including promissory notes) constituting Collateral with a face amount in excess of $1,000,000, in each case duly endorsed in blank or accompanied by an undated instrument of transfer or assignment duly executed in blank by the applicable Grantor, in form and substance reasonably satisfactory to the Collateral Agent.
(b) Without limiting the generality of the foregoing, the Borrower shall deliver to the Collateral Agent, on or prior to the Closing Date, the Intercompany Note (including any and all intercompany promissory notes from the Borrower payable to the order of any of its subsidiaries), duly endorsed in blank, together with all allonges and other instruments of transfer as may be reasonably requested by the Collateral Agent.
(c) Each Grantor shall promptly deliver to the Collateral Agent all tangible chattel paper constituting Collateral with a value in excess of $1,000,000, marked with a legend acceptable to the Collateral Agent indicating that such tangible chattel paper is subject to the Security Interest.
(d) Each Grantor shall take all actions necessary to ensure that the Collateral Agent is the holder of all Instruments and tangible chattel paper delivered in accordance with this Section 3.4 and that, upon such delivery, the Security Interest in such Instruments and tangible chattel paper shall be perfected by possession.
Section 3.5 — Intellectual Property Filings
(a) Each Grantor acknowledges that the security interest in registered intellectual Property (including patents, trademarks, and copyrights) shall be further perfected by the filing of appropriate notices, assignments, or other documents with the USPTO, the U.S. Copyright Office, and such other governmental authorities as may be required under applicable law, in each case as set forth in the intellectual Property Security Agreement.
(b) Each Grantor shall cooperate with the Collateral Agent in making, executing, and delivering all filings, recordings, and registrations necessary or advisable to perfect or maintain the perfection of the Security Interest in the intellectual Property, including the execution and delivery of short-form security agreements for filing with the USPTO and the U.S. Copyright Office.
(c) The parties acknowledge that the specific terms and conditions relating to the perfection of the security interest in intellectual Property are set forth in the intellectual Property Security Agreement, and the provisions of this Section 3.5 are supplemental thereto and not in limitation thereof.
Section 3.6 — Commercial Tort Claims
(a) Each Grantor represents and warrants that, as of the date hereof, Schedule III hereto sets forth a true and complete list of all commercial tort claims of such Grantor with a reasonably estimated value in excess of $2,500,000.
(b) Each Grantor shall promptly (and in any event within thirty (30) days) notify the Collateral Agent in writing of any commercial tort claim acquired by or arising in favor of such Grantor after the date hereof with a reasonably estimated value in excess of $2,500,000, and, upon such notification, shall execute and deliver to the Collateral Agent a supplement to Schedule III in the form of Exhibit B attached hereto (a "Schedule III Supplement") identifying such commercial tort claim and confirming the grant of a security interest therein to the Collateral Agent for the benefit of the Secured Parties.
(c) Each Grantor acknowledges that, until a commercial tort claim is identified on Schedule III (or a Schedule III Supplement), the Security Interest may not attach to such commercial tort claim, and each Grantor agrees to take all actions necessary to ensure the prompt identification and inclusion of all commercial tort claims exceeding the threshold amount set forth in clause (b) above.
Section 3.7 — Further Assurances (Perfection)
Each Grantor shall, at its own expense and upon the reasonable request of the Collateral Agent, promptly execute and deliver, or cause to be executed and delivered, all further instruments, documents, agreements, and certificates, and take all further actions, that the Collateral Agent may reasonably request to (a) perfect and protect the Security Interest granted or intended to be granted hereby, (b) create, preserve, and maintain the first-priority status of the Security Interest (subject only to Liens permitted under the Credit Agreement), (c) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral, and (d) otherwise carry out the purposes of this Security Agreement, including, without limitation:
(i) executing and delivering financing statements, amendments, and continuation statements for filing under the UCC;
(ii) executing and delivering control agreements with respect to deposit accounts, securities accounts, electronic chattel paper, and letter-of-credit rights;
(iii) delivering possessory collateral (including instruments, tangible chattel paper, and certificated securities) to the Collateral Agent;
(iv) executing and filing short-form intellectual property security agreements with the USPTO, the U.S. Copyright Office, and other applicable governmental authorities;
(v) executing and delivering Schedule III Supplements with respect to commercial tort claims; and
(vi) obtaining such governmental and third-party consents and approvals as may be necessary or advisable.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to the Collateral Agent and the Secured Parties as follows:
Section 4.1 — Organization and Good Standing
Each Grantor is duly organized or formed, validly existing, and in good standing (or its equivalent, where applicable) under the laws of its jurisdiction of organization or formation, as set forth on Schedule I attached hereto, and has all requisite corporate, limited liability company, or other organizational power and authority to own, operate, and encumber its properties and assets and to conduct its business as currently conducted. The following is a complete listing of all Grantors, together with their respective entity types and jurisdictions of organization:
(i) Nexford Industrial Holdings Inc. — a corporation organized under the laws of the State of Delaware;
(ii) Granite Peak NIH Holdings, LLC — a limited liability company organized under the laws of the State of Delaware;
(iii) Nexford Precision Components, Inc. — a corporation organized under the laws of the State of Delaware;
(iv) Nexford Engineered Systems, LLC — a limited liability company organized under the laws of the State of Delaware;
(v) Nexford Coatings & Surface Technologies, Inc. — a corporation organized under the laws of the State of Delaware;
(vi) Nexford Manufacturing Services, LLC — a limited liability company organized under the laws of the State of Illinois;
(vii) Nexford Properties, LLC — a limited liability company organized under the laws of the State of Delaware;
(viii) Nexford International Holdings, Inc. — a corporation organized under the laws of the State of Delaware;
(ix) Clearfield Tool & Die, Inc. — a corporation organized under the laws of the Commonwealth of Pennsylvania;
(x) Summit Industrial Fabrication Co. — a corporation organized under the laws of the State of South Carolina;
(xi) Ridgepoint Specialty Coatings, LLC — a limited liability company organized under the laws of the State of Texas; and
(xii) Lakeshore Precision Engineering, Inc. — a corporation organized under the laws of the State of Michigan.
Section 4.2 — Authorization and Enforceability
Each Grantor has full corporate, limited liability company, or other organizational power and authority to execute, deliver, and perform its obligations under this Security Agreement and to grant the Security Interest in the Collateral pursuant hereto. The execution, delivery, and performance by each Grantor of this Security Agreement and the granting of the Security Interest have been duly authorized by all necessary corporate, limited liability company, or other organizational action on the part of such Grantor, including, as applicable, by resolutions of its board of directors, board of managers, or members, and no other action or proceeding on the part of such Grantor or its equity holders is necessary to authorize the execution, delivery, and performance of this Security Agreement. 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 creditors' rights generally, and (b) general principles of equity, whether considered in a proceeding in equity or at law (including concepts of materiality, reasonableness, good faith, and fair dealing).
Section 4.3 — Ownership of Collateral
Each Grantor is the sole legal and beneficial owner of the Collateral purported to be owned by it, or otherwise has good and valid rights therein, and has full power and authority to grant the Security Interest in such Collateral to the Collateral Agent as provided herein. All such Collateral is free and clear of all Liens, claims, encumbrances, charges, options, and adverse claims of any kind, other than (a) the Security Interest created hereunder and under the other Loan Documents, (b) Liens permitted under Section [●] of the Credit Agreement (the "Permitted Liens"), and (c) Liens that will be discharged and released at or prior to the Closing Date.
Section 4.4 — Validity of Security Interest
The Security Interest constitutes a valid security interest in all Collateral in which a security interest may be created under Article 9 of the UCC (or, with respect to Collateral not governed by Article 9, under other applicable law), securing the payment and performance of the Obligations. Upon (a) the filing of UCC-1 financing statements in the applicable filing jurisdictions set forth on Schedule VI, (b) the delivery to the Collateral Agent of all Instruments and tangible chattel paper required to be delivered pursuant to Section 3.4, (c) the execution and delivery of deposit account control agreements and securities account control agreements in accordance with Sections 3.2 and 3.3, and (d) the making of all filings with the USPTO and the U.S. Copyright Office contemplated by Section 3.5 and the intellectual Property Security Agreement, the Collateral Agent will have a first-priority perfected security interest in the Collateral (subject only to Permitted Liens that have priority by operation of law or that are otherwise permitted to have such priority under the Credit Agreement).
Section 4.5 — Grantor Information
Each Grantor represents and warrants that the information set forth on the Schedules attached hereto, as supplemented from time to time, is true, correct, and complete in all material respects as of the date hereof (or, in the case of information set forth on any Schedule delivered after the date hereof, as of the date of delivery of such Schedule), including, without limitation:
(a) the exact legal name of each Grantor as shown on its organizational documents filed with the applicable secretary of state or other filing office;
(b) the jurisdiction of organization or formation of each Grantor;
(c) the organizational identification number or file number assigned to each Grantor by the applicable secretary of state or other filing office;
(d) the federal taxpayer identification number (EIN) of each Grantor;
(e) the chief executive office or principal place of business of each Grantor;
(f) any prior legal names of each Grantor used within the five (5) years preceding the date hereof; and
(g) any prior jurisdictions of organization of each Grantor within the one (1) year preceding the date hereof.
Without limiting the generality of the foregoing: