LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT

 

 

 

 

Reference is made to (a) the Credit Agreement (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I), under which the Revolving Facility Lenders have extended and agreed to extend credit to the Borrowers, and (b) the Indenture governing the Notes.  In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Collateral Agent (for itself and on behalf of the Revolving Facility Secured Parties), the Trustee (for itself and on behalf of the Noteholders), the Noteholder Collateral Agent (for itself and on behalf of the Noteholder Secured Parties), the Company, Ply Gem Holdings Inc. (“ Holdings ”) and the subsidiaries of the Company party hereto agree as follows:

ARTICLE I

Definitions

 

 

“ Administrative Agent ” means Credit Suisse, acting through one or more of its branches or affiliates, in its capacity as Administrative Agent under the Credit Agreement, and its successors in such capacity.

“ Asset Sale Proceeds Account ” means one or more deposit accounts or securities accounts holding the proceeds of any sale or other disposition of any Noteholder First Lien Collateral that are required to be held in such account or accounts pursuant to the terms of the Indenture 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 Revolving Facility Secured Parties).

“ 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 Credit Agreement.

“ 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 Revolving Facility Collateral and the Noteholder Collateral.

“ Collateral Agent ” means General Electric Capital Corporation, in its capacity as Collateral Agent under the Revolving Facility Documents, and its successors in such capacity.

“ Company ” means Ply Gem Industries, Inc., a Delaware corporation.

“ Credit Agreement ” means the Credit Agreement dated as of June 9, 2008, among Holdings, the Borrowers named therein, the Revolving Facility Lenders, the Administrative Agent and the Collateral Agent, as amended, extended, renewed, restated, supplemented, waived, replaced, restructured, repaid, refunded, refinanced or otherwise modified from time to time, in each case with the same or different lenders and agents.

“ Discharge of Senior Secured Obligations ” shall mean the termination of all obligations (except for contingent indemnities and cost and reimbursement obligations to the extent no claim therefor has been made) with respect to all the applicable Senior Secured Obligations Security Documents.

 

 

“ Event of Default ” means an “Event of Default” under and as defined in the Credit Agreement or the Indenture, as the context may require.

“ Grantor ” means Holdings, the Company and each subsidiary of the Company that shall have granted any Lien in favor of the Collateral Agent or the Noteholder Collateral Agent on any of its assets or properties to secure any of the Obligations.

“ Indenture ” means the Indenture dated as of June 9, 2008, among the Company, the other Grantors named therein and the Trustee, as amended, extended, renewed, restated, supplemented, waived, replaced, restructured, repaid, refunded, refinanced or otherwise modified from time to time, in each case with the same or different Trustee.

“ Junior Documents ” means (a) in respect of the Noteholder First Lien Collateral, the Revolving Facility Documents, and (b) in respect of the Revolving Facility First Lien Collateral, the Noteholder Documents.

“ Junior Liens ” means (a) in respect of the Revolving Facility First Lien Collateral, the Noteholder Liens on such Collateral, and (b) in respect of the Noteholder First Lien Collateral, the Revolving Facility Liens on such Collateral.

“ Junior Representative ” means (a) with respect to the Noteholder First Lien Collateral, the Collateral Agent, and (b) with respect to the Revolving Facility First Lien Collateral, the Noteholder Collateral Agent.

“ Junior Secured Obligations ” means (a) with respect to the Noteholder Obligations (to the extent such Obligations are secured by the Noteholder First Lien Collateral), the Revolving Facility Obligations, and (b) with respect to Revolving Facility Obligations (to the extent such Obligations are secured by the Revolving Facility First Lien Collateral), the Noteholder 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 Noteholder First Lien Collateral, the Revolving Facility Secured Parties, and (b) with respect to the Revolving Facility First Lien Collateral, the Noteholder Secured Parties.

“ Junior Secured Obligations Security Documents ” means (a) with respect to the Revolving Facility First Lien Collateral, the Noteholder Security Documents, and (b) with respect to the Noteholder First Lien Collateral, the Revolving Facility 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.

“ New York UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“ Noteholder Collateral ” means all assets and properties subject to Liens created by the Noteholder Security Documents to secure the Noteholder Obligations.

“ Noteholder Collateral Agent ” means U.S. Bank National Association, in its capacity as noteholder collateral agent under the Noteholder Security Documents, and its successors in such capacity.

“ Noteholder Documents ” means the Indenture and the Noteholder Security Documents.

“ Noteholder First Lien Collateral ” means any and all Noteholder Collateral other than the Revolving Facility First Lien Collateral.

“ Noteholder Liens ” means Liens on the Noteholder Collateral created under the Noteholder Security Documents to secure the Noteholder Obligations.

“ Noteholder 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 Trustee or the Noteholder Collateral Agent (in each case on behalf of the Noteholder Secured Parties) on fee or leasehold interests in real property of a Grantor to secure Noteholder Obligations, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.

“ Noteholder Obligations ” means all obligations under the Noteholder Documents.

“ Noteholder Secured Parties ” means, at any time, the Trustee, the Noteholder Collateral Agent, each Noteholder, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Noteholder Document and each other holder of, or obligee in respect of, any Noteholder Obligations outstanding at such time.

“ Noteholder Security Agreement ” means the Collateral Agreement dated as of June 9, 2008, among Holdings, the Company, the subsidiaries of the Company party thereto and the Noteholder Collateral Agent, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.

 

 

“ Noteholder Security Documents ” means the Noteholder Security Agreement, the Noteholder Mortgages, the Intellectual Property Collateral Agreements (as defined in the Noteholder 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 Noteholder Obligations.

“ Noteholders ” means the Holders under and as defined in the Indenture.

“ Notes ” means the 11.75% Senior Secured Notes due 2013 issued under the Indenture.

“ Obligations ” means the Noteholder Obligations and the Revolving Facility 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.

“ Representative ” means (a) in the case of any Noteholder Obligations, the Noteholder Collateral Agent, and (b) in the case of any Revolving Facility Obligations, the Collateral Agent.

“ Revolving Facility Collateral ” means all assets and properties subject to Liens created by the Revolving Facility Security Documents to secure the Revolving Facility Obligations.

“ Revolving Facility Documents ” means the Credit Agreement and the Revolving Facility Security Documents.

“ Revolving Facility First Lien Collateral ” means any and all of the following Revolving Facility 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:

 

 

All capitalized terms used in this definition and not defined elsewhere in this Agreement have the meanings assigned to them in the New York UCC.

“ Revolving Facility First Lien Collateral Transition Date ” means the earlier of (a) the date on which all the Revolving Facility Obligations shall have been paid in full (other than indemnity payments not yet accrued under the Revolving Facility Documents) and all commitments to extend credit under the Credit Agreement shall have been terminated and (b) the date on which all Senior Liens on the Revolving Facility First Lien Collateral shall have been released from the Liens created under the Revolving Facility Documents.

“ Revolving Facility Lenders ” means the Lenders under and as defined in the Credit Agreement.

“ Revolving Facility Liens ” means Liens on the Revolving Facility Collateral created under Revolving Facility Security Documents to secure the Revolving Facility Obligations.

“ Revolving Facility 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 Collateral Agent (on behalf of

 

 

the Revolving Facility Secured Parties) on fee or leasehold interests in real property of a Grantor to secure the Revolving Facility Obligations, as amended, extended, renewed, restated, supplemented or otherwise modified from time to time.

“ Revolving Facility Obligations ” means all “Obligations” (as such term is defined in the Credit Agreement) under the Revolving Facility Documents, the Secured Hedge Agreements and the Secured Cash Management Agreements (as such terms are defined in the Credit Agreement).

“ Revolving Facility Secured Parties ” means, at any time, the Collateral Agent, the Administrative Agent, each Revolving Facility Lender, each L/C Issuer (as defined in the Credit Agreement), each counterparty under any Secured Hedge Agreements and the Secured Cash Management Agreements, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Revolving Facility Document and each other holder of, or obligee in respect of, any Revolving Facility Obligations outstanding at such time.

“ Revolving Facility Security Documents ” means the Credit Agreement (insofar as the same grants a Lien on Collateral), the U.S. Security Agreement (as defined in the Credit Agreement), the Revolving Facility Mortgages, the U.S. Intellectual Property Security Agreement (as defined in the Credit 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 Revolving Facility Obligations.

“ Secured Parties ” means the Noteholder Secured Parties and the Revolving Facility Secured Parties.

“ Security Documents ” means the Noteholder Security Documents and the Revolving Facility Security Documents.

“ Senior Documents ” means (a) in respect of the Noteholder First Lien Collateral, the Noteholder Documents, and (b) in respect of the Revolving Facility First Lien Collateral, the Revolving Facility Documents.

“ Senior Liens ” means (a) in respect of the Revolving Facility First Lien Collateral, the Revolving Facility Liens on such Collateral, and (b) in respect of the Noteholder First Lien Collateral, the Noteholder Liens on such Collateral.

“ Senior Representative ” means (a) with respect to the Noteholder First Lien Collateral, the Noteholder Collateral Agent, and (b) with respect to the Revolving Facility First Lien Collateral, the Collateral Agent.

“ Senior Secured Obligations ” means (a) with respect to the Revolving Facility Obligations (to the extent such Obligations are secured by the Noteholder First Lien Collateral), the Noteholder Obligations, and (b) with respect to Noteholder Obligations (to the extent such Obligations are secured by the Revolving Facility First Lien Collateral), the Revolving Facility 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 Noteholder First Lien Collateral, the Noteholder Secured Parties, and (b) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Secured Parties.

“ Senior Secured Obligations Security Documents ” means (a) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Security Documents, and (b) with respect to the Noteholder First Lien Collateral, the Noteholder 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 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.

“ TIA ” means the Trust Indenture Act of 1939 (15 U.S.C.  Section 77aaa-77bbbb) as in effect on the date hereof.

“ Trustee ” means U.S. Bank National Association, in its capacity as trustee under the Indenture, and its successors in such capacity.

ARTICLE II

Subordination of Junior Liens; Certain Agreements

 

 

 

 

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 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.  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.  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 Parties, 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, Holdings, the Company or any of its subsidiaries, as debtor-in-possession.

 

 

 be taken any action the purpose or effect of which is, or could be, to 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 or 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.