LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of April 26, 2011 among BANK OF AMERICA, N.A., as ABL Administrative Agent, UBS AG, STAMFORD BRANCH, as Term Loan Collateral Agent, NORTEK, INC. and the Subsidiaries of Nortek, Inc. named herein
Exhibit 10.31
dated as of
April 26, 2011
among
BANK OF AMERICA, N.A.,
as ABL Administrative Agent,
as ABL Administrative Agent,
UBS AG, STAMFORD BRANCH,
as Term Loan Collateral Agent,
as Term Loan Collateral Agent,
NORTEK, INC.
and
the Subsidiaries of Nortek, Inc. named herein
LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of April 26, 2011, among BANK OF
AMERICA, N.A., as Administrative Agent under the ABL Credit Agreement referred to herein and as ABL
Administrative Agent for the ABL Secured Parties, UBS AG, STAMFORD BRANCH, as Term Loan Collateral
Agent for the Term Loan Secured Parties referred to herein, NORTEK, INC. and the subsidiaries of
Nortek, Inc. named herein.
Reference is made to (a) the ABL Credit Agreement (such term and each other capitalized term
used and not otherwise defined herein having the meaning assigned to it in Article I herein), under
which the ABL Lenders have extended and agreed to extend credit to the Borrowers, and (b) the Term
Loan Credit Agreement, under which the Term Loan Lenders have extended and agreed to extend credit
to the Borrowers. In consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the ABL
Administrative Agent (for itself and on behalf of the ABL Secured Parties), the Term Loan
Collateral Agent (for itself and on behalf of the Term Loan Secured Parties), the Company and the
subsidiaries of the Company party hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Construction; Certain Defined Terms.
(a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to
have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (i)
any definition of or reference to any agreement, instrument, other document, statute or regulation
herein shall be construed as referring to such agreement, instrument, other document, statute or
regulation as from time to time amended, restated, amended and restated, supplemented or otherwise
modified, (ii) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, but shall not be deemed to include the subsidiaries of such Person unless
express reference is made to such subsidiaries, (iii) the words “herein”, “hereof and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (iv) all references herein to Articles, Sections and Annexes
shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless
otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not
exclusive.
(b) As used in this Agreement, the following terms have the meanings specified below:
“ABL Administrative Agent” means Bank of America, N.A., in its capacity as Administrative
Agent under the ABL Credit Agreement, and its successors in such capacity (it being understood the
ABL Administrative Agent has been appointed as the sole “collateral agent” under the ABL Documents,
and is the sole representative under the ABL Documents with respect to the ABL Collateral and the
remedies with respect thereto).
“ABL Collateral” means all assets and properties subject to Liens created by the ABL Security
Documents to secure the ABL Obligations.
“ABL Credit Agreement” means the Amended and Restated Credit Agreement dated as of December
17, 2010, among the Borrowers named therein, the ABL Lenders, and the ABL Administrative Agent, as
amended, restated, amended and restated, supplemented, waived, Refinanced or otherwise modified
from time to time.
“ABL Documents” means the ABL Credit Agreement and the ABL Security Documents.
“ABL First Lien Collateral” means any and all of the following ABL Collateral now owned or at
any time hereafter acquired by the Company or any other Grantor or in which any such Person may
have now or in the future any right, title or interest:
(a) all Accounts;
(b) all Inventory;
(c) to the extent evidencing, governing, securing or otherwise related to the items referred
to in the preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel Paper, (iii)
Instruments and (iv) Documents;
(d) to the extent evidencing, governing, securing or otherwise related to the items referred
to in the preceding clauses (a) and (b), all Payment Intangibles (including corporate tax refunds),
other than any Payment Intangibles that represent tax refunds in respect of or otherwise relate to
Term Loan First Lien Collateral;
(e) all intercompany indebtedness of the Company or any of its subsidiaries that arises from
cash advances made after the date hereof to enable the obligor or obligors thereon to acquire
Inventory;
(f) all collection accounts, Deposit Accounts, lock-boxes, Securities Accounts and Commodity
Accounts and any cash or other assets in any such accounts and all “Cash Equivalents” as defined in
the ABL Credit Agreement on the date hereof (or as modified from time to time to the extent such
modifications, taken as a whole, are not materially adverse to the Term Loan Secured Parties)
(other than (i) identifiable cash proceeds in respect of Term Loan First Lien Collateral, (ii) as
each may relate to the Capital Stock of the Grantors and (iii) amounts held in any Disposition
Proceeds Account to the extent that such amounts do not exceed the amount of proceeds of the sale
or other disposition of any Term Loan First Lien Collateral that are deposited in such Disposition
Proceeds Account plus interest, dividends, earnings and other proceeds thereof, and
minus
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withdrawals thereof that are applied as provided in the Term Loan Credit Agreement);
(g) all books and records related to the foregoing; and
(h) all Products and Proceeds (including Proceeds of Proceeds) and Supporting Obligations of
any and all of the foregoing in whatever form received, including proceeds of insurance policies
related to Inventory of any Grantor and business interruption insurance and all collateral security
and guarantees given by any other Person with respect to any of the foregoing; provided that no
Proceeds of Proceeds of ABL First Lien Collateral will constitute ABL First Lien Collateral unless
such Proceeds would otherwise constitute ABL First Lien Collateral.
“ABL First Lien Collateral Transition Date” means the earlier of (a) the date on which all the
ABL Obligations shall have been paid in full (other than (i) indemnity payments not yet accrued
under the ABL Documents and (ii) obligations under Secured Hedge Agreements (as defined in the ABL
Credit Agreement) and Secured Cash Management Agreements (as defined in the ABL Credit Agreement)
as to which arrangements satisfactory to the applicable hedging or cash management counterparty, as
applicable, shall have been made) and all commitments to extend credit under the ABL Credit
Agreement shall have been terminated and all Letters of Credit (as defined in the ABL Credit
Agreement) shall have expired or terminated (other than any Letters of Credit as to which
arrangements reasonably satisfactory to the applicable issuing party shall have been made) and (b)
the date on which all Senior Liens on the ABL First Lien Collateral shall have been released.
“ABL Lenders” means the Lenders under and as defined in the ABL Credit Agreement.
“ABL Liens” means Liens on the ABL Collateral created under ABL Security Documents to secure
the ABL Obligations.
“ABL Mortgages” means the mortgages, deeds of trust, leasehold mortgages, assignments of
leases and rents, modifications and other security documents that convey or evidence a Lien in
favor of the ABL Administrative Agent (on behalf of the ABL Secured Parties) on fee or leasehold
interests in real property of a Grantor to secure the ABL Obligations, as amended, restated,
amended and restated, supplemented, replaced or otherwise modified from time to time.
“ABL Obligations” means all “U.S. Obligations” (as such term is defined in the ABL Credit
Agreement) under the ABL Documents, the Secured Hedge Agreements and the Secured Cash Management
Agreements (as such terms are defined in the ABL Credit Agreement).
“ABL Secured Parties” means, at any time, the ABL Administrative Agent, each “Collateral
Agent” (as defined in the ABL Credit Agreement), each ABL Lender, each L/C Issuer (as defined in
the ABL Credit Agreement), each counterparty under any Secured Hedge Agreements (as defined in the
ABL Credit Agreement) and the Secured Cash Management Agreements (as defined in the ABL Credit
Agreement), the beneficiaries of each indemnification
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obligation undertaken by any Grantor under any ABL Document and each other holder of, or obligee in
respect of, any ABL Obligations outstanding at such time.
“ABL Security Agreement” means that certain U.S. Security Agreement dated as of December 17,
2009, among the Company, the subsidiaries of the Company party thereto and the ABL Administrative
Agent, as amended, restated, amended and restated, supplemented, replaced or otherwise modified
from time to time.
“ABL Security Documents” means the ABL Credit Agreement (insofar as the same grants a Lien on
Collateral), the ABL Security Agreement, the ABL Mortgages, the Intellectual Property Security
Agreements (as defined in the ABL Security Agreement) and any other documents now existing or
entered into after the date hereof that create Liens on any assets or properties of any Grantor or
any of its subsidiaries to secure any ABL Obligations.
“Agreement” means this Lien Subordination and Intercreditor Agreement as in effect from time
to time.
“Bankruptcy Code” means Title 11 of the United States Code.
“Borrowers” means the Company and the subsidiaries of the Company that are borrowers under the
ABL Credit Agreement or the Term Loan Credit Agreement, as applicable.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks in New
York City are authorized or required by law to close.
“Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in the case of an
association or business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or limited), and (d) any
other interest or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
“Collateral” means the ABL Collateral and the Term Loan Collateral.
“Collateral Agent” means the ABL Administrative Agent and/or the Term Loan Collateral Agent.
“Company” means Nortek, Inc., a Delaware corporation.
“Discharge” means, (a) in the case of the ABL Obligations and ABL Collateral, (i) the payment
in full of all ABL Obligations (other than (A) indemnity payments not yet accrued under the ABL
Documents and (B) obligations under Secured Hedge Agreements (as defined in the ABL Credit
Agreement) and Secured Cash Management Agreements (as defined in the ABL Credit Agreement) as to
which arrangements satisfactory to the applicable hedging or cash management counterparty, as
applicable, shall have been made) and the termination of all commitments to extend credit under the
ABL Credit Agreement and the termination or expiration of all Letters of Credit (as defined in the
ABL Credit Agreement) (other than any Letters of Credit as to which arrangements reasonably
satisfactory to the applicable issuing party shall have
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been made) and (ii) the release of all ABL Liens on the ABL First Lien Collateral and (b) in the
case of the Term Loan Obligations and the Term Loan Collateral, (i) the payment in full of all Term
Loan Obligations (other than (A) indemnity payments not yet accrued under the Term Loan Documents
and (B) obligations under Secured Hedge Agreements (as defined in the Term Loan Credit Agreement)
as to which arrangements satisfactory to the applicable hedging counterparty shall have been made)
and (ii) the release of all Tem Loan Liens on the Term Loan First Lien Collateral.
“Disposition Proceeds Account” means one or more deposit accounts or securities accounts
established or maintained by the Term Loan Collateral Agent or ABL Administrative Agent for the
sole purpose of holding the proceeds of any sale or other disposition of any Term Loan First Lien
Collateral pending reinvestment pursuant to the terms of the Term Loan Credit Agreement as in
effect on the date hereof (or as modified from time to time to the extent such modifications, taken
as a whole, are not materially adverse to the ABL Secured Parties).
“Enforcement Action” shall have the meaning assigned to such term in Section 2.02(a).
“Enforcement Notice” at a time when an Event of Default under the ABL Credit Agreement or the
Term Loan Credit Agreement has occurred and the ABL Administrative Agent or the Term Loan
Collateral Agent, as applicable, shall have delivered written notice to the Company and (x) in the
case of such a notice delivered by the ABL Administrative Agent, the Term Loan Collateral Agent
and (y) in the case of such a notice delivered by the Term Loan Collateral Agent, the ABL
Administrative Agent, that the ABL Administrative Agent or the Term Loan Collateral Agent, as the
case may be, intends to exercise remedies against any of the Collateral.
“Event of Default” means an “Event of Default” under and as defined in the ABL Credit
Agreement or the Term Loan Credit Agreement, as the context may require.
“Grantor” means the Company and each subsidiary of the Company that shall have granted any
Lien in favor of the ABL Administrative Agent or the Term Loan Collateral Agent on any of its
assets or properties to secure any of the Obligations.
“Junior Documents” means (a) in respect of the Term Loan First Lien Collateral, the ABL
Documents, and (b) in respect of the ABL First Lien Collateral, the Term Loan Documents.
“Junior Liens” means (a) in respect of the ABL First Lien Collateral, the Term Loan Liens on
such Collateral, and (b) in respect of the Term Loan First Lien Collateral, the ABL Liens on such
Collateral.
“Junior Representative” means (a) with respect to the Term Loan First Lien Collateral, the ABL
Administrative Agent, and (b) with respect to the ABL First Lien Collateral, the Term Loan
Collateral Agent.
“Junior Secured Obligations” means (a) with respect to the Term Loan Obligations (to the
extent such Obligations are secured by the Term Loan First Lien Collateral), the
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ABL Obligations, and (b) with respect to ABL Obligations (to the extent such Obligations are
secured by the ABL First Lien Collateral), the Term Loan Obligations.
“Junior Secured Obligations Collateral” means the Collateral in respect of which the Junior
Representative (on behalf of itself and the Junior Secured Obligations Secured Parties) holds a
Junior Lien.
“Junior Secured Obligations Secured Parties” means (a) with respect to the Term Loan First
Lien Collateral, the ABL Secured Parties, and (b) with respect to the ABL First Lien Collateral,
the Term Loan Secured Parties.
“Junior Secured Obligations Security Documents” means (a) with respect to the ABL First Lien
Collateral, the Term Loan Security Documents, and (b) with respect to the Term Loan First Lien
Collateral, the ABL Security Documents.
“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title retention agreement,
any lease in the nature thereof, any other agreement to give a security interest therein and any
filing of or agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes of any jurisdiction) with respect thereto; provided, however, that in no event
shall an operating lease be deemed to constitute a Lien.
“Loan Agreements” mean the ABL Credit Agreement and the Term Loan Credit Agreement.
“Notice of Event of Default” shall mean a written certification from any Collateral Agent
addressed to the other Collateral Agent certifying that an Event of Default has occurred and is
continuing under the applicable Loan Agreement, and that any required notice thereof has been given
and any grace periods provided for therein have expired and such Collateral Agent has demanded the
repayment of all the principal amount of the applicable Obligations.
“Obligations”
means the Term Loan Obligations and the ABL Obligations.
“Person” means any
individual, sole proprietorship, partnership, limited liability company, joint venture, joint-stock
company, trust, unincorporated organization, association, corporation, government or any agency or
political subdivision thereof or any other entity.
“Refinance” means, in respect of any indebtedness, and in each case subject to the provisions
of Section 2.10 hereof, to refinance, extend, renew, restructure or replace such indebtedness, or
to issue other indebtedness or enter into alternative financing arrangements in exchange or
replacement for such indebtedness (in each case in whole or in part), including by adding or
replacing lenders, creditors, agents, trustees, borrowers and/or guarantors, and including, in each
case, but not limited to, after the original instrument giving rise to such indebtedness has been
terminated and including, in each case, through any ABL Credit Agreement, Term Loan Credit
Agreement or other agreement. “Refinanced” and “Refinancing” have correlative meanings.
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“Representative” means (a) in the case of any Term Loan Obligations, the Term Loan Collateral
Agent, and (b) in the case of any ABL Obligations, the ABL Administrative Agent.
“Secured Parties” means the Term Loan Secured Parties and the ABL Secured Parties.
“Security Documents” means the Term Loan Security Documents and the ABL Security Documents.
“Senior Documents” means (a) in respect of the Term Loan First Lien Collateral, the Term Loan
Documents, and (b) in respect of the ABL First Lien Collateral, the ABL Documents.
“Senior Liens” means (a) in respect of the ABL First Lien Collateral, the ABL Liens on such
Collateral, and (b) in respect of the Term Loan First Lien Collateral, the Term Loan Liens on such
Collateral.
“Senior Representative” means (a) with respect to the Term Loan First Lien Collateral, the
Term Loan Collateral Agent, and (b) with respect to the ABL First Lien Collateral, the ABL
Administrative Agent.
“Senior Secured Obligations” means (a) with respect to the ABL Obligations (to the extent such
Obligations are secured by the Term Loan First Lien Collateral), the Term Loan Obligations, and (b)
with respect to Term Loan Obligations (to the extent such Obligations are secured by the ABL First
Lien Collateral), the ABL Obligations.
“Senior Secured Obligations Collateral” means the Collateral in respect of which the Senior
Representative (on behalf of itself and the applicable Senior Secured Obligations Secured Parties)
holds a Senior Lien.
“Senior Secured Obligations Secured Parties” means (a) with respect to the Term Loan First
Lien Collateral, the Term Loan Secured Parties, and (b) with respect to the ABL First Lien
Collateral, the ABL Secured Parties.
“Senior Secured Obligations Security Documents” means (a) with respect to the ABL First Lien
Collateral, the ABL Security Documents, and (b) with respect to the Term Loan First Lien
Collateral, the Term Loan Security Documents.
“subsidiary” means, with respect to any Person, (a) any corporation, association or other
business entity (other than a partnership, joint venture or limited liability company) of which
more than 50% of the total voting power of the Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or trustees thereof
is at the time of determination owned or controlled, directly or indirectly, by such Person or one
or more of the other subsidiaries of that Person or a combination thereof, and (b) any partnership,
joint venture or limited liability company of which (i) more than 50% of the capital accounts,
distribution rights, total equity and voting interests or general and limited partnership
interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or
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more of the other subsidiaries of that Person or a combination thereof, whether in the form of
membership, general, special or limited partnership interests or otherwise, and (ii) such Person or
any subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“Term Loan Administrative Agent” means UBS AG, Stamford Branch, in its capacity as Term Loan
Administrative Agent under the Term Loan Credit Agreement, and its successors in such capacity.
“Term Loan Collateral” means all assets and properties subject to Liens created by the Term
Loan Security Documents to secure the Term Loan Obligations.
“Term Loan Collateral Agent” means UBS AG, Stamford Branch, in its capacity as Term Loan
Collateral Agent under the Term Loan Security Documents, and its successors in such capacity.
“Term Loan Credit Agreement” means the Credit Agreement dated as of April 26, 2011, among the
Company, the Term Loan Administrative Agent and the Term Loan Collateral Agent, as amended,
restated, amended and restated, supplemented, waived, Refinanced or otherwise modified from time to
time.
“Term Loan Documents” means the Term Loan Credit Agreement and the Term Loan Security
Documents.
“Term Loan First Lien Collateral” means any and all Term Loan Collateral, other than the ABL
First Lien Collateral, including, without limitation, and in each case to the extent not
constituting ABL First Lien Collateral, (a) all Equipment; (b) all real property; (c) all
intellectual property; (d) all General Intangibles; (e) all documents of title related to
Equipment; (f) all Capital Stock or other equity interests of each subsidiary of the Company or any
Grantor; (g) all promissory notes and instruments evidencing indebtedness owed to any Grantor
(other than intercompany loans advanced to fund the purchase of Inventory); (h) all books and
records, Supporting Obligations and related letters of credit, Commercial Tort Claims or other
claims and causes of action, in each case, to the extent related primarily to the foregoing; (i)
all other Goods and assets of the Grantors not constituting ABL First Lien Collateral; and (j)
substitutions, replacements, accessions, Products and Proceeds (including, without limitation,
insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds of suit) of
any or all of the foregoing.
“Term Loan Lenders” means the Lenders under and as defined in the Term Loan Credit Agreement.
“Term Loan Liens” means Liens on the Term Loan Collateral created under the Term Loan Security
Documents to secure the Term Loan Obligations.
“Term Loan Mortgages” means the mortgages, deeds of trust, leasehold mortgages, assignments of
leases and rents, modifications and other security documents that convey or evidence a Lien in
favor of the Term Loan Collateral Agent or Term Loan Administrative Agent (in each case on behalf
of the Term Loan Secured Parties) on fee or leasehold interests in
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real property of a Grantor to secure Term Loan Obligations, as amended, restated, amended and
restated, supplemented, replaced or otherwise modified from time to time.
“Term Loan Obligations” means all “Obligations” (as such term is defined in the Term Loan
Credit Agreement) under the Term Loan Documents and under the Secured Hedge Agreements (as such
term is defined in the Term Loan Credit Agreement).
“Term Loan Secured Parties” means, at any time, the Term Loan Administrative Agent, the Term
Loan Collateral Agent, each Term Loan Lender, each Hedge Bank (as defined in the ABL Credit
Agreement), the beneficiaries of each indemnification obligation undertaken by any Grantor under
any Term Loan Document and each other holder of, or obligee in respect of, any Term Loan
Obligations outstanding at such time.
“Term Loan Security Agreement” means that certain Security Agreement dated as of April 26,
2011, among the Company, the subsidiaries of the Company party thereto and the Term Loan Collateral
Agent, as amended, restated, amended and restated, supplemented, replaced or otherwise modified
from time to time.
“Term Loan Security Documents” means the Term Loan Security Agreement, the Term Loan
Mortgages, the Intellectual Property Security Agreements (as defined in the Term Loan Security
Agreement) and any other documents now existing or entered into after the date hereof that create
Liens on any assets or properties of any Grantor to secure any Term Loan Obligations.
“UCC” means the Uniform Commercial Code as from time time in effect 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.
(c) Unless otherwise defined in this Agreement, terms defined in Article 8 or 9 of the UCC are
used in this Agreement (whether or not capitalized) as such terms are defined in such Article 8 or
9 (including Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity
Accounts, Commodity Contract, Deposit Accounts, Documents, Equipment, Farm Products, Financial
Assets, Fixtures, General Intangibles, Payment Intangibles, Goods, Instruments, Inventory,
Investment Property, Letter of Credit Rights, Proceeds, Products, Securities Accounts, Securities
Intermediary, Security, Securities Account, Security Entitlements and Supporting Obligations).
ARTICLE II
Subordination of Junior Liens; Certain Agreements
SECTION 2.01. Subordination of Junior Liens.
(a) All Junior Liens in respect of any Collateral are expressly subordinated and made junior
in right, priority, operation and effect to any and all Senior Liens in respect of
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such Collateral, notwithstanding anything contained in this Agreement, the Term Loan Documents, the
ABL Documents or any other agreement or instrument to the contrary, and irrespective of the time,
order or method of creation, attachment or perfection of such Junior Liens and Senior Liens or any
failure, defect or deficiency or alleged failure, defect or deficiency in any of the foregoing.
The Junior Representative agrees to execute and deliver (at the sole cost and expense of the
Grantors) all subordination agreements and other instruments as shall be reasonably requested by
the Senior Representative to confirm and evidence any subordination of Junior Secured Obligations
Collateral provided for in this Section 2.01(a). If requested, such subordination agreement or
other instrument shall be in recordable form and shall be in form and substance reasonably
satisfactory to the Senior Representative, the Junior Representative and the title insurance
company insuring the Liens of the Secured Parties on the Mortgaged Properties (as defined in the
Term Loan Credit Agreement).
(b) It is acknowledged that (i) the aggregate amount of the Senior Secured Obligations may
be increased from time to time, (ii) a portion of the Senior Secured Obligations consists or may
consist of indebtedness that is revolving in nature, and the amount thereof that may be outstanding
at any time or from time to time may be increased or reduced and subsequently reborrowed, and (iii)
the Senior Secured Obligations may be increased, Refinanced, restated, supplemented or otherwise
amended or modified from time to time, all without affecting the subordination of the Junior Liens
hereunder or the provisions of this Agreement defining the relative rights of the ABL Secured
Parties and the Term Loan Secured Parties. The lien priorities provided for herein shall not be
altered or otherwise affected by any amendment, modification, supplement, increase, restatement or
Refinancing of either the Junior Secured Obligations (or any part thereof) or the Senior Secured
Obligations (or any part thereof), by the release of any Collateral or of any guarantees for any
Senior Secured Obligations or by any action that any Representative or Secured Party may take or
fail to take in respect of any Collateral.
SECTION 2.02. No Action With Respect to Junior Secured Obligations Collateral Subject to
Senior Liens. Subject to clause (b) below, no Junior Representative or other Junior Secured
Obligations Secured Party shall commence or instruct any Junior Representative to commence any
judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver,
liquidator or similar official appointed for or over, attempt any action to take possession of,
exercise any right, remedy or power with respect to, or otherwise take any action to enforce its
interest in or realize upon, or take any other action available to it in respect of, any Junior
Secured Obligations Collateral under any Junior Secured Obligations Security Document, under
applicable law or otherwise (any such action, an “Enforcement Action”), at any time when such
Junior Secured Obligations Collateral shall be subject to any Senior Lien and any Senior Secured
Obligations secured by such Senior Lien shall remain outstanding or any commitment to extend credit
that would constitute Senior Secured Obligations secured by such Senior Lien shall remain in
effect, it being agreed that only the Senior Representative, acting in accordance with the
applicable Senior Secured Obligations Security Documents, shall be entitled to take any such
actions or exercise any such remedies. Notwithstanding the foregoing, any Junior Representative
may, subject to Section 2.05, (A) take all such actions as it shall deem necessary to preserve,
perfect or continue the perfection of its Junior Liens, (B) in any bankruptcy, insolvency or other
proceeding commenced by or against Company or any other Grantor, the Junior Representative may file
a claim or statement of interest with respect to the Junior Secured Obligations, (C) the Junior
Secured Obligations Secured Parties shall be entitled to file any necessary responsive or
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defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made
by any person objecting to or otherwise seeking the disallowance of the claims of the Junior
Secured Obligations Secured Parties, including without limitation any claims secured by the
Collateral, if any, (D) subject to Section 2.04, in any bankruptcy, insolvency or other proceeding,
the Junior Secured Obligations Secured Parties shall be entitled to file any pleadings, objections,
motions or agreements which assert rights or interests available to unsecured creditors of the
Grantors arising under the Bankruptcy Code or applicable law, and (E) in any bankruptcy, insolvency
or other proceeding, the Junior Secured Obligations Secured Parties shall be entitled to vote on
any plan of reorganization, in each case of the foregoing clauses (A) through (E) to the extent
consistent with the provisions hereof.
(b) Notwithstanding anything to the contrary herein, with respect to the Senior Secured
Obligations Collateral, (i) after a period of 180 days has elapsed since the later of: (A) the
date on which the Junior Representative declared the existence of an Event of Default and demanded
the repayment of all the principal amount of any Junior Lien Obligations; and (B) the date on which
the Senior Representative received a Notice of Event of Default (the “Standstill Period”), the
Junior Representative and/or any Junior Secured Obligations Secured Party may commence an
Enforcement Action with respect to the Senior Secured Obligations Collateral; provided, however,
that (A) notwithstanding the expiration of the Standstill Period, in no event shall the Junior
Representative and/or any Junior Secured Obligations Secured Party commence an Enforcement Action
with respect to any Senior Secured Obligations Collateral if the Senior Representative or any
Senior Secured Obligations Secured Parties shall have commenced, and shall be diligently pursuing,
an Enforcement Action, and (B) following the Standstill Period, if the Junior Representative and/or
any Junior Secured Obligations Secured Party has commenced an Enforcement Action and either the
Senior Representative or any Senior Secured Obligations Secured Party, as applicable, shall have
commenced an Enforcement Action thereafter, the Junior Representative or the applicable Junior
Secured Obligations Secured Parties that commenced the Enforcement Action shall promptly cease such
action so long as the Senior Representative or the applicable Senior Secured Obligations Secured
Party shall be diligently pursuing its Enforcement Action; and (ii) proceeds of any Senior Secured
Obligations Collateral received pursuant to an Enforcement Action by the Junior Representative
and/or any Junior Secured Obligations Secured Party in respect of any Junior Secured Obligations
will be paid over to the Senior Representative in accordance with Section 2.04 and applied in
accordance with Section 2.14.
SECTION 2.03. No Duties of Senior Representative.
Each Junior Secured Obligations Secured Party acknowledges and agrees that neither the Senior
Representative nor any other Senior Secured Obligations Secured Party shall have any duties or
other obligations to such Junior Secured Obligations Secured Party with respect to any Senior
Secured Obligations Collateral, other than (i) to transfer to the Junior Representative any
proceeds of any such Collateral that constitutes Junior Secured Obligations Collateral remaining in
its possession following any sale, transfer or other disposition of such Collateral (in each case,
unless the Junior Liens on all such Junior Secured Obligations Collateral are terminated and
released prior to or concurrently with such sale, transfer, disposition, payment or satisfaction),
the payment and satisfaction in full of the Senior Secured Obligations secured thereby and the
termination of any commitment to extend credit that would constitute Senior Secured Obligations
secured thereby, or, if the Senior Representative shall be in possession of all or
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any part of such Collateral after such payment and satisfaction in full and termination, such
Collateral or any part thereof remaining, in each case without representation or warranty on the
part of the Senior Representative or any Senior Secured Obligations Secured Party and (ii) to serve
as gratuitous bailee pursuant to Article III herein. In furtherance of the foregoing, each Junior
Secured Obligations Secured Party acknowledges and agrees that until the Senior Secured Obligations
secured by any Collateral in respect of which such Junior Secured Obligations Secured Party holds a
Junior Lien shall have been paid and satisfied in full and any commitment to extend credit that
would constitute Senior Secured Obligations secured thereby shall have been terminated, the Senior
Representative shall be entitled, for the benefit of the holders of such Senior Secured
Obligations, to sell, transfer or otherwise dispose of or deal with such Collateral as provided
herein and in the Senior Secured Obligations Security Documents without regard to any Junior Lien
or any rights to which the holders of the Junior Secured Obligations would otherwise be entitled as
a result of such Junior Lien. Without limiting the foregoing, each Junior Secured Obligations
Secured Party agrees that neither the Senior Representative nor any other Senior Secured
Obligations Secured Party shall have any duty or obligation first to marshal or realize upon any
type of Senior Secured Obligations Collateral (or any other collateral securing the Senior Secured
Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Collateral
(or any other collateral securing the Senior Secured Obligations), in any manner that would
maximize the return to the Junior Secured Obligations Secured Parties, notwithstanding that the
order and timing of any such realization, sale, disposition or liquidation may affect the amount of
proceeds actually received by the Junior Secured Obligations Secured Parties from such realization,
sale, disposition or liquidation. Following the associated Discharge of Senior Secured
Obligations, the Junior Secured Obligations Secured Parties may, subject to any other agreements
binding on such Junior Secured Obligations Secured Parties, assert their rights under the UCC or
otherwise to any proceeds remaining following a sale, disposition or other liquidation of
Collateral by, or on behalf of the Junior Secured Obligations Secured Parties. Each of the Junior
Secured Obligations Secured Parties waives any claim such Junior Secured Obligations Secured Party
may now or hereafter have against the Senior Representative or any other Senior Secured Obligations
Secured Party (or their representatives) arising out of (i) any actions which the Senior
Representative or the Senior Secured Obligations Secured Parties take or omit to take (including,
actions with respect to the creation, perfection or continuation of Liens on any Collateral,
actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to
realize upon, any of the Collateral and actions with respect to the collection of any claim for all
or any part of the Senior Secured Obligations from any account debtor, guarantor or any other
party) in accordance with the Senior Secured Obligations Security Documents or any other agreement
related thereto or to the collection of the Senior Secured Obligations or the valuation, use,
protection or release of any security for the Senior Secured Obligations, (ii) any election by the
Senior Representative or any Senior Secured Obligations Secured Party, in any proceeding instituted
under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (iii)
subject to Section 2.06, any borrowing by, or grant of a security interest or administrative
expense priority under Section 364 of the Bankruptcy Code by, the Company or any of its
subsidiaries, as
debtor-in-possession.
SECTION 2.04. No Interference; Payment Over; Reinstatement.
(a) Each Junior Secured Obligations Secured Party agrees that (i) it will not knowingly take
or cause to be taken any action the purpose or effect of which is, or could be, to
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make any Junior Lien pari passu with, or to give such Junior Secured Obligations Secured Party any
preference or priority relative to, any Senior Lien with respect to the Collateral subject to such
Senior Lien and Junior Lien or any part thereof, (ii) it will not challenge or question in any
proceeding the validity or enforceability of any Senior Secured Obligations or Senior Secured
Obligations Security Document, or the validity, attachment, perfection or priority of any Senior
Lien, or the validity or enforceability of the priorities, rights or duties established by any
other provisions of this Agreement, (iii) it will not take or cause to be taken any action the
purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether
by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral
subject to any Junior Lien by any Senior Secured Obligations Secured Parties secured by Senior
Liens on such Collateral or any Senior Representative acting on their behalf, (iv) it shall have no
right to (A) direct any Senior Representative or any holder of Senior Secured Obligations to
exercise any right, remedy or power with respect to the Collateral subject to any Junior Lien or
(B) consent to the exercise by any Senior Representative or any other Senior Secured Obligations
Secured Party of any right, remedy or power with respect to the Collateral subject to any Junior
Lien, (v) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other
proceeding any claim against any Senior Representative or other Senior Secured Obligations Secured
Party seeking damages from or other relief by way of specific performance, instructions or
otherwise with respect to, and neither any Senior Representative nor any other Senior Secured
Obligations Secured Party shall be liable for, any action taken or omitted to be taken by such
Senior Representative or other Senior Secured Obligations Secured Party with respect to any
Collateral securing such Senior Secured Obligations that is subject to any Junior Lien, (vi) it
will not seek, and hereby waives any right, to have any Senior Secured Obligations Collateral
subject to any Junior Lien or any part thereof marshaled upon any foreclosure or other disposition
of such Collateral and (vii) it will not attempt, directly or indirectly, whether by judicial
proceedings or otherwise, to challenge the enforceability of any provision of this Agreement.
(b) The Junior Representative and each other Junior Secured Obligations Secured Party hereby
agrees that if it shall obtain possession of any Senior Secured Obligations Collateral or shall
realize any proceeds or payment in respect of any such Collateral, pursuant to any Junior Secured
Obligations Security Document or by the exercise of any rights available to it under applicable law
or in any bankruptcy, insolvency or similar proceeding or through any other exercise of remedies,
at any time when any Senior Secured Obligations secured or intended to be secured by such
Collateral shall remain outstanding or any commitment to extend credit that would constitute Senior
Secured Obligations secured or intended to be secured by such Senior Lien shall remain in effect,
then it shall hold such Collateral, proceeds or payment in trust for the Senior Secured Obligations
Secured Parties and transfer such Collateral, proceeds or payment, as the case may be, to the
Senior Representative reasonably promptly after obtaining actual knowledge or notice from the
Senior Secured Obligations Secured Parties that it has possession of such Senior Secured
Obligations Collateral or proceeds or payments in respect thereof. Each Junior Secured Obligations
Secured Party agrees that if, at any time, it receives notice or obtains actual knowledge that all
or part of any payment with respect to any Senior Secured Obligations previously made shall be
rescinded for any reason whatsoever, such Junior Secured Obligations Secured Party shall promptly
pay over to the Senior Representative any payment received by it and then in its possession or
under its control in respect of any Collateral subject to any Senior Lien securing such Senior
Secured Obligations and shall
promptly turn any Collateral subject to any such Senior Lien then held by it over to the
Senior Representative, and the provisions set forth in
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this Agreement shall be reinstated as if such payment had not been made, until the payment and
satisfaction in full of the Senior Secured Obligations. All Junior Liens will remain attached to
and enforceable against all proceeds so held or remitted. Anything contained herein to the
contrary notwithstanding, this Section 2.04(b) shall not apply to any proceeds of Senior Secured
Obligations Collateral realized in a transaction not prohibited by the Senior Documents and as to
which the possession or receipt thereof by the Junior Representative or other Junior Secured
Obligations Secured Party is otherwise permitted by the Senior Documents.
SECTION 2.05. Automatic Release of Junior Liens.
(a) The Junior Representative and each other Junior Secured Obligations Secured Party agree
that (i) in the event the Senior Secured Obligations Secured Parties release their Lien on any
Senior Secured Obligations Collateral subject to any Junior Lien (other than a release in
connection with a sale, transfer or other disposition of Senior Secured Obligations Collateral,
which shall be governed by clause (a)(ii) below), such Junior Lien on such Collateral shall
terminate and be released automatically and without further action unless, at the time of such
release by the Senior Secured Obligations Secured Parties, an Event of Default shall then have
occurred and be continuing under the Junior Documents (provided that any Junior Lien that would
have otherwise been released and terminated pursuant to this clause (a)(i) in the absence of such
an Event of Default under the Junior Documents shall terminate and be released automatically and
without further action when such Event of Default (and all other Events of Default under the Junior
Documents) ceases to exist); and (ii) in the event of a sale, transfer or other disposition of
Senior Secured Obligations Collateral subject to any Junior Lien (regardless of whether or not an
Event of Default has occurred and is continuing under the Junior Documents at the time of such
sale, transfer or other disposition), such Junior Lien on such Collateral shall terminate and be
released automatically and without further action if the applicable Senior Liens on such Collateral
are released and if such sale, transfer or other disposition either (A) is then not prohibited by
the Junior Documents or (B) occurs in connection with the foreclosure upon or other exercise of
rights and remedies with respect to such Senior Secured Obligations Collateral; provided that such
Junior Lien shall remain in place with respect to any proceeds of a sale, transfer or other
disposition under this clause (a)(ii) that remain after the satisfaction in full of the Senior
Secured Obligations. In addition, for the avoidance of doubt, the Junior Representative and each
Junior Secured Obligations Secured Party agree that, with respect to any property or assets that
would otherwise constitute Senior Secured Obligations Collateral, the requirement that a Junior
Lien attach to, or be perfected with respect to, such property or assets shall be waived
automatically and without further action so long as the requirement that a Senior Lien attach to,
or be perfected with respect to, such property or assets is waived by the Senior Secured
Obligations Secured Parties (or the Senior Representative) in accordance with the Senior Documents
and so long as no Event of Default under the Junior Documents shall have occurred, be continuing or
would result therefrom at such time.
(b) The Junior Representative agrees to execute and deliver (at the sole cost and expense of
the Grantors) all such releases and other instruments as shall reasonably be requested by the
Senior Representative to evidence and confirm any release of Junior Secured Obligations Collateral
provided for in this Section 2.05.
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SECTION 2.06. Certain Agreements With Respect to Bankruptcy or Insolvency Proceedings.
(a) This Agreement shall continue in full force and effect notwithstanding the commencement
of any proceeding under the Bankruptcy Code or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law by or against the Company or any of its subsidiaries.
(b) If the Company or any of its subsidiaries shall become subject to a case under the
Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing
(“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of
the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, each
Junior Secured Obligations Secured Party agrees that it will raise no objection to any such
financing or to the Liens on the Senior Secured Obligations Collateral securing the same
(“DIP Financing Liens”) or to any use of cash collateral that constitutes Senior Secured
Obligations Collateral, unless the Senior Secured Obligations Secured Parties, or a representative
authorized by the Senior Secured Obligations Secured Parties, shall then oppose or object to such
DIP Financing or such DIP Financing Liens or use of cash collateral (and, to the extent that such
DIP Financing Liens are senior to, or rank pari passu with, the Senior Liens, the Junior
Representative will, for itself and on behalf of the other Junior Secured Obligations Secured
Parties, subordinate the Junior Liens on the Senior Secured Obligations Collateral to the Senior
Liens and the DIP Financing Liens), so long as the Junior Secured Obligations Secured Parties
retain Liens on all the Junior Secured Obligations Collateral, including proceeds thereof arising
after the commencement of such proceeding, with the same priority as existed prior to the
commencement of the case under the Bankruptcy Code.
(c) Each Junior Secured Obligations Secured Party agrees that it will not object to or
oppose a sale or other disposition of any Senior Secured Obligations Collateral (or any portion
thereof) under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if
the Senior Secured Obligations Secured Parties shall have consented to such sale or disposition of
such Senior Secured Obligations Collateral.
(d) If any Secured Party is required in any insolvency, bankruptcy or other proceeding or
otherwise to turn over or otherwise pay to the estate of the applicable Grantor any amount paid in
respect of ABL Obligations or the Term Loan Obligations, as the case may be (a “Recovery”), then
such ABL Secured Parties or Term Loan Secured Parties shall be entitled to a reinstatement of ABL
Obligations or the Term Loan Obligations, as the case may be, with respect to all such recovered
amounts. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall
be reinstated in full force and effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto from such date of
reinstatement.
SECTION 2.07. Reinstatement.
In the event that any of the Senior Secured Obligations shall be paid in full and such payment
or any part thereof shall subsequently, for whatever reason (including an order or judgment for
disgorgement of a preference under the Bankruptcy Code, or any similar law, or the
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settlement of any claim in respect thereof), be required to be returned or repaid, the terms and
conditions of this Article II shall be fully applicable thereto until all such Senior Secured
Obligations shall again have been paid in full in cash.
SECTION 2.08. Entry Upon Premises by the ABL Administrative Agent and the ABL Lenders.
(a) If the ABL Administrative Agent takes any enforcement action with respect to the ABL
First Lien Collateral, the Term Loan Secured Parties (i) shall cooperate with the ABL
Administrative Agent (at the sole cost and expense of the ABL Administrative Agent and subject to
the condition that the Term Loan Secured Parties shall have no obligation or duty to take any
action or refrain from taking any action that could reasonably be expected to result in the
incurrence of any liability or damage to the Term Loan Secured Parties) in its efforts to enforce
its security interest in the ABL First Lien Collateral and to finish any work-in-process and
assemble the ABL First Lien Collateral, (ii) shall not take any action designed or intended to
hinder or restrict in any respect the ABL Administrative Agent from enforcing its security interest
in the ABL First Lien Collateral or from finishing any work-in-process or assembling the ABL First
Lien Collateral, and (iii) subject to the rights of any landlords under real estate leases, shall
permit the ABL Administrative Agent, its employees, agents, advisers and representatives, at the
sole cost and expense of the ABL Secured Parties and upon reasonable advance notice, to enter upon
and use the Term Loan First Lien Collateral (including (A) equipment, processors, computers and
other machinery related to the storage or processing of records, documents or files and (B)
intellectual property), for a period not to exceed 180 days after the taking of such enforcement
action, for purposes of (1) assembling and storing the ABL First Lien Collateral and completing the
processing of and turning into finished goods of any ABL First Lien Collateral consisting of
work-in-process, (2) selling any or all of the ABL First Lien Collateral located on such Term Loan
First Lien Collateral, whether in bulk, in lots or to customers in the ordinary course of business
or otherwise, (3) removing any or all of the ABL First Lien Collateral located on such Term Loan
First Lien Collateral, or (4) taking reasonable actions to protect, secure and otherwise enforce
the rights of the ABL Secured Parties in and to the ABL First Lien Collateral; provided, however,
that nothing contained in this Agreement shall restrict the rights of the Term Loan Administrative
Agent or the Term Loan Collateral Agent from selling, assigning or otherwise transferring any Term
Loan First Lien Collateral prior to the expiration of such 180-day period if the purchaser,
assignee or transferee thereof agrees to be bound by the provisions of this Section 2.08. If any
stay or other order prohibiting the exercise of remedies with respect to the ABL First Lien
Collateral has been entered by a court of competent jurisdiction, such 180-day period shall be
tolled during the pendency of any such stay or other order. If the ABL Administrative Agent
conducts a public auction or private sale of the ABL First Lien Collateral at any of the real
property included within the Term Loan First Lien Collateral, the ABL Administrative Agent shall
provide the Term Loan Collateral Agent with reasonable notice and use reasonable efforts to hold
such auction or sale in a manner which would not unduly disrupt the Term Loan Collateral Agent’s
use of such real property.
(b) During the period of actual occupation, use or control by the ABL Administrative Agent
or its employees, agents, or representatives, of any Term Loan First Lien Collateral, the ABL
Secured Parties shall (i) be responsible for the ordinary course third-party expenses related
thereto, including costs with respect to heat, light, electricity, water and real property
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taxes with respect to that portion of any premises so used or occupied, and (ii) be obligated
to repair at their expense any physical damage to such Term Loan First Lien Collateral or other
assets or property resulting from such occupancy, use or control, and to leave such Term Loan First
Lien Collateral or other assets or property in substantially the same condition as it was at the
commencement of such occupancy, use or control, ordinary wear and tear excepted. The ABL Secured
Parties jointly and severally agree to pay, indemnify and hold the Term Loan Administrative Agent
and the Term Loan Collateral Agent and their respective officers, directors, employees and agents
harmless from and against any liability, cost, expense, loss or damages, including reasonable and
documented legal fees and expenses, resulting from the gross negligence or willful misconduct of
the ABL Administrative Agent or any of its agents, representatives, employees, or invitees in its
or their operation of such facilities. In the event, and only in the event, that in connection
with its use of some or all of the premises constituting Term Loan First Lien Collateral, the ABL
Administrative Agent requires the services of any employees of the Company or any of its
subsidiaries, the ABL Administrative Agent shall pay directly to any such employees the
appropriate, allocated wages of such employees, if any, during the time periods that the ABL
Administrative Agent requires their services. Notwithstanding the foregoing, in no event shall the
ABL Secured Parties have any liability to the Term Loan Secured Parties pursuant to this Section
2.08 as a result of any condition (including any environmental condition, claim or liability) on or
with respect to the Term Loan First Lien Collateral existing prior to the date of the exercise by
the ABL Secured Parties of their rights under this Section 2.08 and the ABL Secured Parties shall
have no duty or liability to maintain the Term Loan First Lien Collateral in a condition or manner
better than that in which it was maintained prior to the use thereof by the ABL Secured Parties, or
for any diminution in the value of the Term Loan First Lien Collateral that results solely from
ordinary wear and tear resulting from the use of the Term Loan First Lien Collateral by the ABL
Secured Parties in the manner and for the time periods specified under this Section 2.08. Without
limiting the rights granted in this paragraph, the ABL Administrative Agent, to the extent that
rights have been exercised under this Section 2.08 by the ABL Administrative Agent, shall cooperate
with the Term Loan Secured Parties in connection with any efforts made by the Term Loan Secured
Parties to sell the Term Loan First Lien Collateral.
SECTION 2.09. Insurance.
Unless and until written notice by the ABL Administrative Agent to the Term Loan
Administrative Agent that the ABL Obligations have been Discharged, as between the ABL
Administrative Agent, on the one hand, and the Term Loan Administrative Agent and Term Loan
Collateral Agent, as the case may be, on the other hand, only the ABL Administrative Agent will
have the right (subject to the rights of the Grantors under the ABL Documents and the Term Loan
Documents) to adjust or settle any insurance policy or claim covering or constituting ABL First
Lien Collateral in the event of any loss thereunder and to approve any award granted in any
condemnation or similar proceeding affecting the ABL First Lien Collateral. Unless and until
written notice by the Term Loan Administrative Agent to the ABL Administrative Agent that the Term
Loan Obligations have been Discharged, as between the ABL Administrative Agent, on the one hand,
and the Term Loan Administrative Agent and the Term Loan Collateral Agent, as the case may be, on
the other hand, only the Term Loan Collateral Agent will have the right (subject to the rights of
the Grantors under the ABL Documents and the Term Loan Documents) to adjust or settle any insurance
policy covering or constituting Term Loan First Lien Collateral in the event of any loss thereunder
and to approve any award granted in any condemnation
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or similar proceeding solely affecting the Term Loan First Lien Collateral. To the extent
that an insured loss covers or constitutes both ABL First Lien Collateral and Term Loan First Lien
Collateral, then the ABL Administrative Agent and the Term Loan Collateral Agent will work jointly
and in good faith to collect, adjust or settle (subject to the rights of the Grantors under the ABL
Documents and the Term Loan Documents) under the relevant insurance policy. Notwithstanding
anything to the contrary in any Security Document, if any provision of any ABL Security Document or
any Term Loan Security Document requires the Company or any of its subsidiaries to name the ABL
Administrative Agent or the Term Loan Collateral Agent as an additional insured or a loss payee
under any insurance policy, such requirement shall have been complied with if any such insurance
policy also names the ABL Administrative Agent or the Term Loan Collateral Agent, as applicable, as
an additional insured or loss payee, as the case may be, in each case subject to the terms of this
Section 2.09.
SECTION 2.10. Refinancings.
The ABL Obligations and the Term Loan Obligations may be Refinanced, in whole or in part, in
each case, without notice to, or the consent (except to the extent a consent is otherwise required
to permit the Refinancing transaction under any ABL Document or any Term Loan Document) of any ABL
Secured Party or any Term Loan Secured Party, all without affecting the Lien priorities provided
for herein or the other provisions hereof; provided, however, that the holders of any such
Refinancing indebtedness (or an authorized agent or trustee on their behalf) bind themselves in
writing to the terms of this Agreement pursuant to such documents or agreements (including
amendments or supplements to this Agreement) as the ABL Administrative Agent or the Term Loan
Collateral Agent, as the case may be, shall reasonably request and in form and substance reasonably
acceptable to the ABL Administrative Agent or the Term Loan Collateral Agent, as the case may be.
In connection with any Refinancing contemplated by this Section 2.10, this Agreement may be amended
at the request and sole expense of the Company, and without the consent of either Representative,
(a) to add parties (or any authorized agent or trustee therefor) providing any such Refinancing
indebtedness, (b) to establish that Liens on any Term Loan First Lien Collateral securing such
Refinancing indebtedness shall have the same priority as the Liens on any Term Loan First Lien
Collateral securing the indebtedness being Refinanced, and (c) to establish that the Liens on any
ABL First Lien Collateral securing such Refinancing indebtedness shall have the same priority as
the Liens on any ABL First Lien Collateral securing the indebtedness being Refinanced, all on the
terms provided for herein immediately prior to such Refinancing.
SECTION 2.11. Amendments to Security Documents.
Without the prior written consent of the Senior Representative, no Junior Secured Obligations
Security Document may be amended, supplemented or otherwise modified or entered into to the extent
such amendment, supplement or modification, or the terms of any new Junior Secured Obligations
Security Document, would be prohibited by, or would require any Grantor to act or refrain from
acting in a manner that would violate, any of the terms of this Agreement.
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SECTION 2.12. Legends.
The ABL Administrative Agent acknowledges with respect to the ABL Credit Agreement and the ABL
Security Documents, and the Term Loan Collateral Agent acknowledges with respect to the Term Loan
Credit Agreement and the Term Loan Security Documents, that the ABL Credit Agreement, the Term Loan
Credit Agreement and each Security Document will contain the appropriate legend set forth on Annex
I.
SECTION 2.13. No Debt Subordination.
Nothing in this Agreement shall be deemed to subordinate the right of the ABL Lenders or the
Term Loan Lenders to receive payment, whether before or after the occurrence of any default, event
of default or insolvency proceeding (other than payments from Collateral, to the extent contrary to
the provisions of this Agreement).
SECTION 2.14. Application of Proceeds.
Prior to the Discharge of Senior Secured Obligations, whether or not any proceeding under the
Bankruptcy Code has been commenced by or against any Grantor, any Senior Secured Obligations
Collateral or proceeds thereof received in connection with any exercise of remedies with respect to
such Senior Secured Obligations Collateral (at such time as such Collateral or proceeds has been
monetized) shall be applied: (i) first, to the payment in full in cash of the Senior Secured
Obligations in accordance with the Senior Documents and (ii) second, to the payment in full in cash
of the Junior Secured Obligations in accordance with the Junior Documents, and the Senior
Representative shall provide the Junior Representative with such Collateral or proceeds in the same
form as received and with any necessary endorsements. If any exercise of remedies with respect to
the Collateral produces non-cash proceeds, then such non-cash proceeds shall be held by the
applicable Representative that exercised such remedies as additional Collateral and, at such time
as such non-cash proceeds are monetized, shall be applied as set forth above.
SECTION 2.15. Exercise of Remedies — Set Off and Tracing of Priorities in Proceeds.
(a) The ABL Administrative Agent, for itself and on behalf of the ABL Secured Parties,
acknowledges and agrees that, to the extent the ABL Administrative Agent or any ABL Secured Party
exercises its rights of setoff against any Grantors’ deposit accounts or securities accounts that
contain identifiable proceeds of Term Loan First Lien Collateral, a percentage of the amount of
such setoff equal to the percentage that such Proceeds bear to the total amount on deposit in or
credited to the balance of such deposit accounts or securities accounts shall be deemed to
constitute Term Loan First Lien Collateral, which amount shall be held and distributed pursuant to
Section 2.14; provided, however that the foregoing shall not apply to any setoff by
the ABL Administrative Agent against any ABL First Lien Collateral to the extent applied to the
payment of ABL Obligations.
(b) Subject to Section 2.15(c), the ABL Administrative Agent, for itself and on behalf of
the ABL Secured Parties and the Term Loan Collateral Agent, for itself and on behalf of the Term
Loan Secured Parties, further agree that prior to an issuance of an Enforcement
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Notice, any Proceeds of Collateral, whether or not deposited in an account subject to an account
control agreement, shall not (as between the Collateral Agents, the ABL Secured Parties and the
Term Loan Secured Parties) be treated as Proceeds of Collateral for purposes of determining the
relative priorities in the Collateral.
(c) The Term Loan Collateral Agent, for itself and on behalf of the applicable Term Loan
Secured Parties, also agrees that prior to an issuance of an Enforcement Notice, (i) all funds
deposited in a Deposit Account or Securities Account (excluding, for the avoidance of doubt, the
Disposition Proceeds Accounts) subject to an account control agreement that constitute ABL First
Lien Collateral and (ii) then applied to the ABL Obligations (including, without limitation,
pursuant to the occurrence of a “cash dominion period” or similar event under the ABL Documents)
shall be treated as ABL First Lien Collateral and, unless the ABL Administrative Agent has actual
knowledge to the contrary, any claim that such payments made to the ABL Administrative Agent
through such Deposit Accounts and Securities Accounts that are subject to such account control
agreements are Proceeds of or otherwise constitute Term Loan Collateral are waived by the Term Loan
Collateral Agent and the Term Loan Secured Parties; provided that after receipt of an Enforcement
Notice from the Term Loan Collateral Agent, all such funds and proceeds of Collateral shall be
applied pursuant to Section 2.14.
SECTION 2.16. Junior Secured Obligations Secured Parties Rights as Unsecured
Creditors.
Except as otherwise set forth herein, both before and during any bankruptcy, insolvency or
other proceeding, any of the Junior Secured Obligations Secured Parties may take any actions and
exercise any and all rights that would be available to a holder of unsecured claims, including,
without limitation, the commencement of bankruptcy, insolvency or other proceeding, against the
Company or any other Grantor in accordance with applicable law; provided, that the Junior Secured
Obligations Secured Parties may not take any such actions to the extent inconsistent with this
Agreement; provided, further, that in the event that any of the Junior Secured Obligations Secured
Parties becomes a judgment lien creditor in respect of any Collateral as a result of its
enforcement of its rights as an unsecured creditor with respect to the Junior Secured Obligations,
such judgment lien shall be subject to the terms of this Agreement for all purposes (including in
relation to the Senior Secured Obligations) as the other Liens securing the Junior Secured
Obligations are subject to this Agreement.
SECTION 2.17. Similar Liens and Agreements.
The parties hereto agree that it is their intention that the ABL Collateral and the Term Loan
Collateral be identical. In furtherance of the foregoing, the parties hereto agree, subject to the
other provisions of this Agreement:
(a) upon request by the ABL Administrative Agent or the Term Loan Collateral Agent, to
cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time
in order to determine the specific items included in the ABL Collateral and the Term Loan
Collateral and the steps taken to perfect their respective Liens thereon and the identity of the
respective parties obligated under the ABL Documents and the Term Loan Documents;
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(b) that the documents and agreements creating or evidencing the ABL Collateral and the Term
Loan Collateral shall be in all material respects the same forms of documents other than with
respect to (i) the first lien and the second lien nature of the obligations thereunder and (ii)
the delivery of Collateral, the security interest in which may be perfected only by possession or
control by a single person of such Collateral prior to the Discharge of Senior Secured Obligations;
(c) each Grantor agrees that, in the event any Grantor takes any action to grant or perfect
a Lien in favor of one Collateral Agent in any assets, such Grantor shall also take such action to
grant or perfect a Lien (subject to the terms of this Agreement) in favor of the other Collateral
Agent without request of such Collateral Agent; and
(d) each Grantor agrees that, in the event any subsidiary of such Grantor which from time to
time after the date hereof guarantees the ABL Obligations or the Term Loan Obligations or pledges
any assets as collateral for the ABL Obligations or Term Loan Obligations, then such Grantor shall
cause such subsidiary to also guarantee the ABL Obligations or Term Loan Obligations, as applicable
or pledge assets as collateral for the ABL Obligations or Term Loan Obligations, as applicable.
ARTICLE III
Gratuitous Bailment for Perfection of Certain Security Interests; Rights Under Permits and Licenses
SECTION 3.01. General.
The Senior Representative agrees that if it shall at any time hold a Senior Lien on any Junior
Secured Obligations Collateral that can be perfected by the possession or control of such
Collateral or of any account in which such Collateral is held, and if such Collateral or any such
account is in fact in the possession or under the control of the Senior Representative, the Senior
Representative will serve as gratuitous bailee for and on behalf of and for the benefit of the
Junior Representative for the sole purpose of perfecting the Junior Lien of the Junior
Representative on such Collateral to the extent that a security interest in such Collateral or
account may be perfected by an agent serving as gratuitous bailee for and on behalf of another
party. It is agreed that the obligations of the Senior Representative and the rights of the Junior
Representative and the other Junior Secured Obligations Secured Parties in connection with any such
bailment arrangement will be in all respects subject to the provisions of Article II.
Notwithstanding anything to the contrary herein, the Senior Representative will be deemed to make
no representation as to the adequacy of the steps taken by it to perfect the Junior Lien on any
such Collateral and shall have no responsibility, duty, obligation or liability to the Junior
Representative or other Junior Secured Obligations Secured Party or any other Person for such
perfection or failure to perfect, it being understood that the sole purpose of this Article is to
enable the Junior Secured Obligations Secured Parties to obtain a perfected Junior Lien in such
Collateral to the extent, if any, that such perfection results from the possession or control of
such Collateral or any such account by the Senior Representative. Subject to Section 2.07, at such
time as the Senior Secured Obligations secured by the Senior Lien of the Senior Representative
shall have been paid and satisfied in full and any commitment to extend credit that would
constitute such Senior Secured
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Obligations shall have been terminated, the Senior Representative shall take all such actions
in its power as shall reasonably be requested by the Junior Representative (at the sole cost and
expense of the Grantors) to transfer possession or control of such Collateral or any such account
(in each case to the extent the Junior Representative has a Lien on such Collateral or account
after giving effect to any prior or concurrent releases of Liens) to the Junior Representative;
provided that if the ABL Obligations are Refinanced in accordance with Section 2.10, such
Collateral and control will be transferred to the ABL Administrative Agent designated for such
Refinancing indebtedness.
SECTION 3.02. Deposit Accounts.
The Company and its subsidiaries may from time to time establish deposit accounts with certain
depositary banks in which collections from Inventory and Accounts may be deposited. Unless the
Junior Liens on such ABL First Lien Collateral shall have been or concurrently are released, after
the occurrence of the ABL First Lien Collateral Transition Date, the ABL Administrative Agent shall
(a) to the extent that the same are then under the sole dominion and control of the ABL
Administrative Agent and that such action is otherwise within the power and authority of the ABL
Administrative Agent pursuant to the ABL Documents, at the request of the Term Loan Administrative
Agent or the Term Loan Collateral Agent, transfer all cash and other assets in any such Deposit
Account maintained with the ABL Administrative Agent to the Term Loan Collateral Agent (and each
Grantor hereby authorizes and consents to any such transfer) and (b) at the request of the Term
Loan Collateral Agent, cooperate with the Company and the Term Loan Collateral Agent (at the
expense of the Company) in permitting control of any other Deposit Accounts to be transferred to
the Term Loan Collateral Agent (or for other arrangements with respect to each such Deposit Account
satisfactory to the Term Loan Collateral Agent to be made); provided that if the ABL Obligations
are Refinanced in accordance with Section 2.10, such Collateral and control will be transferred to
the ABL Administrative Agent designated for such Refinancing indebtedness; it being understood and
agreed that any existing control agreements in favor of the ABL Administrative Agent shall be
revised to include the Term Loan Collateral Agent and any future control agreements shall be in
favor of the ABL Administrative Agent and the Term Loan Collateral Agent.
SECTION 3.03. Rights under Permits and Licenses.
The Term Loan Collateral Agent agrees that if the ABL Administrative Agent shall require
rights available under any permit or license controlled by the Term Loan Collateral Agent in order
to realize on any ABL First Lien Collateral, the Term Loan Collateral Agent (subject to the terms
of the Term Loan Credit Agreement, including the Term Loan Collateral Agent’s rights to
indemnification thereunder) take all such actions as shall be available to them (at the sole
expense of the Grantors), consistent with applicable law and reasonably requested by the ABL
Administrative Agent in writing, to make such rights available to the ABL Administrative Agent,
subject to the Term Loan Liens. The ABL Administrative Agent agrees that if the Term Loan
Collateral Agent shall require rights available under any permit or license controlled by the ABL
Administrative Agent (as certified to the ABL Administrative Agent by the Term Loan Collateral
Agent, upon which the ABL Administrative Agent may rely) in order to realize on any Term Loan First
Lien Collateral, the ABL Administrative Agent shall take all such actions as shall be available to
it (at the sole expense of the Grantors), consistent with applicable
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law and reasonably requested by the Term Loan Collateral Agent in writing, to make such rights
available to the Term Loan Collateral Agent, subject to the ABL Liens.
ARTICLE IV
Existence and Amounts of Liens and Obligations
Whenever a Representative shall be required, in connection with the exercise of its rights or
the performance of its obligations hereunder, to determine the existence or amount of any Senior
Secured Obligations (or the existence of any commitment to extend credit that would constitute
Senior Secured Obligations) or Junior Secured Obligations, or the existence of any Lien securing
any such obligations, or the Collateral subject to any such Lien, it may request that such
information be furnished to it in writing by the other Representative and shall be entitled to make
such determination on the basis of the information so furnished; provided, however, that if a
Representative shall fail or refuse reasonably promptly to provide the requested information, the
requesting Representative shall be entitled to make any such determination by such method as it
may, in the exercise of its good faith judgment, determine, including by reliance upon a
certificate of the Company. Each Representative may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with the provisions of the
preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have
no liability to the Company or any of its subsidiaries, any Secured Party or any other Person as a
result of such determination.
ARTICLE V
Consent of Grantors
Each Grantor hereby consents to the provisions of this Agreement and the intercreditor
arrangements provided for herein and agrees that the obligations of the Grantors under the Security
Documents will in no way be diminished or otherwise affected by such provisions or arrangements
(except as expressly provided herein).
ARTICLE VI
Representations and Warranties
SECTION 6.01. Representations and Warranties of Each Party.
Each party hereto represents and warrants to the other parties hereto as follows:
(a) Such party is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has all requisite power and authority to enter into and
perform its obligations under this Agreement.
(b) This Agreement has been duly executed and delivered by such party.
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(c) The execution, delivery and performance by such party of this Agreement (i) do not
require any consent or approval of, registration or filing with or any other action by any
governmental authority of which the failure to obtain could reasonably be expected to have a
Material Adverse Effect (as defined in the ABL Credit Agreement), (ii) will not violate any
applicable law or regulation or any order of any governmental authority or any indenture, agreement
or other instrument binding upon such party which could reasonably be expected to have a Material
Adverse Effect and (iii) will not violate the charter, by-laws or other organizational documents of
such party.
SECTION 6.02. Representations and Warranties of Each Representative.
Each of the Term Loan Collateral Agent and the ABL Administrative Agent represents and
warrants to the other parties hereto that it is authorized under the Term Loan Credit Agreement and
the ABL Credit Agreement, respectively, to enter into this Agreement.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices.
All notices and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the ABL Administrative Agent, to it at Bank of America, N.A., 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention of Xxxxxx Xxxxxxxxx (Telecopy No. (000) 000-0000);
(b) if to the Term Loan Collateral Agent, to it at UBS AG, Stamford Branch, 677 Washington
Boulevard, Attention of Banking Products Services Agency (Telecopy No. (000) 000-0000);
(c) if to the Company, to it at Nortek, Inc., 00 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxxxx (Telecopy No. 401-751-4610); and
(d) if to any other Grantor, to it in care of the Company as provided in clause (d) above.
Any party hereto may change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto (and for this purpose a notice to the Company shall
be deemed to be a notice to each Grantor). All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to have been given on
the date of receipt (if a Business Day) and on the next Business Day thereafter (in all other
cases) if delivered by hand or overnight courier service or sent by telecopy or on the date five
Business Days after dispatch by certified or registered mail if mailed, in each case delivered,
sent or mailed (properly addressed) to such party as provided in this Section 7.01 or in accordance
with the latest unrevoked direction from such party given in accordance with this
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Section 7.01. As agreed to in writing among the Company, the Term Loan Collateral Agent and the
ABL Administrative Agent from time to time, notices and other communications may also be delivered
by e-mail to the e-mail address of a representative of the applicable Person provided from time to
time by such Person.
SECTION 7.02. Waivers; Amendment.
(a) No failure or delay on the part of any party hereto in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this Agreement or consent
to any departure by any party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 7.02, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or demand on any
party hereto in any case shall entitle such party to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be terminated, waived, amended or
modified except pursuant to an agreement or agreements in writing entered into by each
Representative and the Company; provided, however, that this Agreement may be amended from time to
time, in each case to the extent such amendment is in form and substance reasonably satisfactory to
each Representative, (x) as provided in Section 2.10 and (y)(A) to add other parties (or any
authorized agent thereof or trustee therefor) holding Credit Agreement Refinancing Indebtedness
(as defined in the Term Loan Credit Agreement) that are incurred in compliance with the ABL
Documents and the Term Loan Documents, (B) to establish that the Liens on any Term Loan First Lien
Collateral securing such Credit Agreement Refinancing Indebtedness shall be pari passu hereunder
with the Liens on such Term Loan First Lien Collateral securing the Term Loan Obligations and
senior to the Liens on such Term Loan First Lien Collateral securing any ABL Obligations, all on
the terms provided for herein immediately prior to such amendment and (C) to establish that the
Liens on any ABL First Lien Collateral securing such Credit Agreement Refinancing Indebtedness
shall be pari passu hereunder with the Liens on such ABL First Lien Collateral securing the Term
Loan Obligations and junior and subordinated to the Liens on such ABL First Lien Collateral
securing any ABL Obligations, all on the terms provided for herein immediately prior to such
amendment. Any such additional party and each party hereto shall be entitled to rely upon a
certificate delivered by an officer of the Company certifying that such Credit Agreement
Refinancing Indebtedness was issued or borrowed in compliance with the ABL Documents and the Term
Loan Documents.
SECTION 7.03. Parties in Interest.
This Agreement shall be binding upon and inure to the benefit of the parties hereto (including
any Person that becomes a party hereto after the date hereof, including, but not limited to, the
holders of Credit Agreement Refinancing Indebtedness) and their respective successors and assigns,
as well as the other Term Loan Secured Parties and ABL Secured Parties, all of whom are intended to
be bound by, and to be third party beneficiaries of, this Agreement.
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SECTION 7.04. Survival of Agreement.
All covenants, agreements, representations and warranties made by any party in this Agreement
shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement.
SECTION 7.05. Counterparts.
This Agreement may be executed in counterparts, each of which shall constitute an original but
all of which when taken together shall constitute a single contract. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
SECTION 7.06. Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the
remaining provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 7.07. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law of the
State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in
New York County and of the United States District Court of the Southern District of New York, and
any appellate court from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent permitted by law,
in such federal court. Each of the parties hereto agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right
that any party hereto may otherwise have to bring any action or proceeding relating to this
Agreement in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section 7.07. Each of the parties
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hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 7.01. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 7.08. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.08.
SECTION 7.09. Headings.
Article, Section and Annex headings used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken into consideration
in interpreting, this Agreement.
SECTION 7.10. Conflicts.
In the event of any conflict or inconsistency between the provisions of this Agreement and the
provisions of any of the other ABL Documents and/or Term Loan Documents, the provisions of this
Agreement shall control.
SECTION 7.11. Provisions Solely to Define Relative Rights.
The provisions of this Agreement are and are intended solely for the purpose of defining the
relative rights of the ABL Secured Parties, on the one hand, and the Term Loan Secured Parties, on
the other hand. None of the Company, any other Grantor or any other creditor thereof shall have
any rights or obligations hereunder, except as expressly provided in this Agreement (provided that
nothing in this Agreement (other than Sections 2.05, 2.06, 2.10, 2.11 or Article VII) is intended
to or will amend, waive or otherwise modify the provisions of the ABL Credit Agreement or the Term
Loan Credit Agreement), and neither the Company nor any other Grantor may rely on the terms hereof
(other than Sections 2.01(b), 2.05, 2.06, 2.10 and 2.11, Article VI and Article VII). Nothing in
this Agreement is intended to or shall impair the obligations of the Company or any other Grantor,
which are absolute and unconditional, to pay the Obligations under the Term Loan Documents and the
ABL Documents as and when the same shall become due and payable in accordance with their terms.
Notwithstanding anything to the contrary herein, in any Term Loan Document or any ABL Document, the
Grantors shall not be required to act or refrain from acting (a) pursuant to this Agreement or any
Term Loan
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Document with respect to any ABL First Lien Collateral in any manner that would cause a default under
any ABL Document, or (b) pursuant to this Agreement or any ABL Document with respect to any Term
Loan First Lien Collateral in any manner that would cause a default under any Term Loan Document.
SECTION 7.12. Certain Terms Concerning Term Loan Collateral Agent, and ABL Administrative
Agent.
Each of the Term Loan Collateral Agent and ABL Administrative Agent is executing and
delivering this Agreement solely in its capacity as such and pursuant to direction set forth in the
Term Loan Credit Agreement and the ABL Credit Agreement, as the case may be; and in so doing,
neither the Term Loan Collateral Agent nor the ABL Administrative Agent shall be responsible for
the terms or sufficiency of this Agreement for any purpose. Neither the Term Loan Collateral Agent
nor the ABL Administrative Agent shall have any duties or obligations under or pursuant to this
Agreement other than such duties as may be expressly set forth in this Agreement as duties on its
part to be performed or observed. In entering into this Agreement, or in taking (or forbearing
from) any action under or pursuant to the Agreement, the Term Loan Collateral Agent shall have and
be protected by all of the rights, immunities, indemnities and other protections granted to it
under the Term Loan Credit Agreement (including without limitation Article IX thereof) and, in the
case of the Term Loan Collateral Agent, the Term Loan Security Agreement. In entering into this
Agreement, or in taking (or forbearing from) any action under or pursuant to the Agreement, the ABL
Administrative Agent shall have and be protected by all of the rights, immunities, indemnities and
other protections granted to it under the ABL Credit Agreement (including without limitation
Article IX thereof) and the other ABL Documents.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
| BANK OF AMERICA, N.A., as ABL Administrative Agent, |
||||
| By: | /s/ Xxxxxx Xxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxx | |||
| Title: | Vice President | |||
Signature page to the Lien Subordination and Intercreditor Agreement
| UBS AG, STAMFORD BRANCH, as Term Loan Collateral Agent, |
||||
| By: | /s/ Xxxx X. Xxxx | |||
| Name: | Xxxx X. Xxxx | |||
| Title: | Associate Director Banking Products Services, US |
|||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Associate Director Banking Products Services, US |
|||
Signature page to the Lien Subordination and Intercreditor Agreement
| NORTEK, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Vice President and Treasurer | |||
Signature page to the Lien Subordination and Intercreditor Agreement
| AIGIS MECHTRONICS, INC. | ||||
| BROAN-MEXICO HOLDINGS, INC. | ||||
| BROAN-NUTONE LLC | ||||
| BROAN-NUTONE STORAGE SOLUTIONS LP | ||||
| CES GROUP, LLC | ||||
| CES INTERNATIONAL LTD. | ||||
| CLPK, LLC | ||||
| ELAN HOME SYSTEMS, L.L.C. | ||||
| ERGOTRON, INC. | ||||
| GATES THAT OPEN, LLC | ||||
| GEFEN, LLC | ||||
| GOVERNAIR LLC | ||||
| HUNTAIR, INC. | ||||
| HUNTAIR MIDDLE EAST HOLDINGS, INC. | ||||
| LINEAR LLC | ||||
| LITE TOUCH, INC. | ||||
| MAGENTA RESEARCH LTD. | ||||
| MAMMOTH, INC. | ||||
| NILES AUDIO CORPORATION | ||||
| NORDYNE LLC | ||||
| NORDYNE INTERNATIONAL, INC. | ||||
| NORTEK, INC. | ||||
| NORTEK INTERNATIONAL, INC. | ||||
| NUTONE LLC | ||||
| OMNIMOUNT SYSTEMS, INC. | ||||
| OPERATOR SPECIALTY COMPANY, INC. | ||||
| PACIFIC ZEPHYR RANGE HOOD INC. | ||||
| PANAMAX LLC | ||||
| RANGAIRE GP, INC. | ||||
| RANGAIRE LP, INC. | ||||
| SECURE WIRELESS, INC. | ||||
| SPEAKERCRAFT, LLC | ||||
| TEMTROL, LLC | ||||
| THE AVC GROUP, LLC | ||||
| XANTECH LLC | ||||
| ZEPHYR VENTILATION, LLC | ||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Vice President and Treasurer | |||
| (of entity listed or as an officer of the managing member, sole member or general partner) | ||||
Signature page to the Lien Subordination and Intercreditor Agreement
ANNEX I
Provision for the ABL Credit Agreement and the Term Loan Credit Agreement
Reference is made to the Lien Subordination and Intercreditor Agreement dated as of April 26,
2011, among Bank of America, N.A., as ABL Administrative Agent thereunder for the ABL Secured
Parties referred to therein; UBS AG, Stamford Branch, as Term Loan Collateral Agent; Nortek, Inc.;
and the other subsidiaries of Nortek, Inc. named therein (the “Intercreditor Agreement”). Each
[ABL Lender hereunder] [Term Loan Lender hereunder,] (a) consents to the subordination of Liens
provided for in the Intercreditor Agreement, (b) agrees that it will be bound by and will take no
actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes and instructs
the [ABL Administrative Agent] [Term Loan Collateral Agent] to enter into the Intercreditor
Agreement as [ABL Administrative Agent] [Term Loan Collateral Agent] and on behalf of such [ABL
Lender] [Term Loan Lender]. The foregoing provisions are intended as an inducement to the lenders
under the [ABL Credit Agreement] [Term Loan Credit Agreement] to extend credit and such lenders are
intended third party beneficiaries of such provisions and the provisions of the Intercreditor
Agreement.
Provision for ABL Security Documents and Term Loan Security Documents
Reference is made to the Lien Subordination and Intercreditor Agreement dated as of April 26,
2011, among Bank of America, N.A., as ABL Administrative Agent thereunder for the ABL Secured
Parties referred to therein; UBS AG, Stamford Branch, as Term Loan Collateral Agent and as Term
Loan Collateral Agent; Nortek, Inc.; and the other subsidiaries of Nortek, Inc. named therein (the
“Intercreditor Agreement”). Notwithstanding any other provision contained herein, this Agreement,
the Liens created hereby and the rights, remedies, duties and obligations provided for herein are
subject in all respects to the provisions of the Intercreditor Agreement and, to the extent
provided therein, the applicable Senior Secured Obligations Security Documents (as defined in the
Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of
this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement
shall control.
