Exhibit 10.7

SUBORDINATION AND INTERCREDITOR AGREEMENT

This SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) is dated as of
August 7, 2017, and entered into by and among ACF FINCO I LP, a Delaware limited
partnership, in its capacity as administrative agent under the Senior Loan
Documents (as defined herein) (in such capacity, together with its successors
and assigns in such capacity from time to time, “Senior Agent”), and WILMINGTON
SAVINGS FUND SOCIETY, FSB, in its capacity as administrative agent under the
Subordinated Loan Documents (as defined herein) (in such capacity, together with
its successors and assigns in such capacity from time to time, the “Subordinated
Agent”).

RECITALS

A NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation (the
“Borrower”), the lenders from time to time parties thereto, and the Senior
Agent, have entered into that certain First Lien Credit Agreement, dated as of
even date herewith (as amended, restated, supplemented or otherwise modified
from time to time, the “Senior Credit Agreement”);

B Pursuant to that certain Guaranty and Security Agreement, dated as of even
date herewith (as amended, restated, supplemented or otherwise modified from
time to time, the “Senior Guaranty”), the Guarantors (as defined herein) have
guaranteed the Obligations (as defined in the Senior Credit Agreement);

C The obligations of (i) the Borrower under the Senior Credit Agreement and
(ii) the Guarantors under the Senior Guaranty are secured on a senior priority
basis by liens on substantially all of the assets of the Borrower and the
Guarantors, pursuant to the terms of certain of the Senior Loan Documents;

D The Borrower, the lenders from time to time party thereto, and the
Subordinated Agent have entered into that certain Second Lien Term Loan Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement, the “Subordinated Credit Agreement”);

E Pursuant to that certain Second Lien Guaranty and Security Agreement, dated as
of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms of this Agreement, the
“Subordinated Guaranty”), the Guarantors have guaranteed the Obligations (as
defined in the Subordinated Credit Agreement);

F The obligations of (i) the Borrower under the Subordinated Credit Agreement
and (ii) the Guarantors under the Subordinated Guaranty are secured on a junior
priority basis by liens on substantially all of the assets of the Borrower and
the Guarantors, pursuant to the terms of certain of the Subordinated Loan
Documents;

G One of the conditions of the Senior Credit Agreement is that (1) the Senior
Obligations (as defined herein) be senior and prior in right of payment to the
Subordinated Obligations (as defined herein) as set forth in this Agreement, and
(2) the priority of the Senior Agent’s security interests in and liens on the
Collateral (as defined herein) be senior and prior to the Subordinated Agent’s
security interests in and liens on the Collateral as set forth in this
Agreement; and

 

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H The Subordinated Agent and the other Subordinated Claimholders have agreed to
(1) the subordination of the Subordinated Obligations to the Senior Obligations;
and (2) the subordination of its Liens to the Liens of the Senior Agent upon the
terms and subject to the conditions set forth in this Agreement.

The Senior Agent and each of the Subordinated Claimholders hereby agree as
follows:

1. Definitions.

(a) Defined Terms. As used in this Agreement, the following terms shall have the
following meanings:

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now or hereafter in effect, or any successor statute.

“Bankruptcy Law” means the Bankruptcy Code and any other federal, state, or
foreign law for the relief of debtors.

“Blockage Period” means a Non-Payment Blockage Period or a Payment Blockage
Period.

“Borrower” has the meaning set forth in the recitals to this Agreement.

“Business Day” means any day excluding Saturday, Sunday, and any day which is a
legal holiday under the laws of the State of New York or which is a day on which
the Senior Agent is otherwise closed for transacting business with the public.

“Cash Collateral” has the meaning set forth in Section 5(b).

“Claim Standstill Notice” means a written notice from the Senior Agent to the
Subordinated Agent referencing the Event of Default that has occurred under any
of the Senior Loan Documents and specifically designating such notice as a
“Claim Standstill Notice”.

“Claim Standstill Period” means the period from and including the date of
receipt by the Subordinated Agent of a Claim Standstill Notice until the first
to occur of (a) the 180th day after receipt by the Subordinated Agent of such
Claim Standstill Notice, (b) the date on which the Senior Agent has expressly
waived or acknowledged the cure of all Events of Default under the Senior Loan
Documents that gave rise to such Claim Standstill Period, (c) the date of
acceleration of the Senior Obligations, (d) the commencement of an Insolvency
Proceeding, or (e) the Discharge of the Senior Obligations.

 

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“Collateral” means all assets and property (whether real, personal, or mixed)
now owned or hereafter acquired by any Obligor in or upon which a Lien is
granted under any of the Senior Loan Documents or any of the Subordinated Loan
Documents and all products and Proceeds of any of the foregoing.

“Collection Action” means (a) any demand or request for any payment or
Distribution, any commencement of any litigation or other similar proceeding,
any acceleration of the Subordinated Obligations, or the commencement of any
other remedy, in each case in respect of the Subordinated Obligations, or
(b) any commencement of, or joinder with any creditor in commencing, any
Insolvency Proceeding against any Obligor or any assets of any Obligor.

“Control Collateral” means any Collateral consisting of a certificated security
(as defined in the UCC), investment property (as defined in the UCC), a deposit
account (as defined in the UCC), and any other Collateral as to which a Lien may
be perfected through physical possession or control by the secured party, or any
agent therefor.

“DIP Financing” has the meaning set forth in Section 5(b).

“DIP Financing Conditions” means (a) the sum of the aggregate principal amount
of the DIP Financing and the outstanding amount of the Senior Obligations as of
the commencement of the Insolvency Proceeding does not exceed 115% of the Senior
Debt Cap, (b) the Subordinated Agent retains its Liens with respect to the
Collateral (including, solely to the extent provided as adequate protection in
accordance with this Agreement, proceeds thereof arising after the commencement
of such Insolvency Proceeding) that existed as of the date of the commencement
of the applicable Insolvency Proceeding, junior to the Liens securing DIP
Financing, and (c) the terms of DIP Financing do not (i) compel the Loan Parties
to seek a confirmation of a specific plan of reorganization or (ii) expressly
require the sale, liquidation or disposition of a material portion of the
Collateral prior to a default under the DIP Financing.

“Discharge of the Senior Obligations” means, except to the extent otherwise
expressly provided in Section 8,

(a) payment in full in cash of the Senior Obligations (other than outstanding
Letters of Credit and unasserted contingent indemnification obligations as to
which no claim is known or determinable);

(b) termination or expiration of all commitments to extend credit that would
constitute Senior Obligations; and

(c) termination or cash collateralization (in an amount and in the manner
required by the Senior Credit Agreement) of all outstanding Letters of Credit.

“Discharge of the Subordinated Obligations” means

(a) payment in full in cash of the Subordinated Obligations (other than
unasserted contingent indemnification obligations as to which no claim is known
or determinable); and

 

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(b) termination or expiration of all commitments to extend credit that would
constitute Subordinated Obligations.

“Disposition” or “Dispose” means the sale, assignment, transfer, license, lease
(as lessor), or other disposition of any property by any person (or the granting
of any option or other right to do any of the foregoing).

“Distribution” means any payment or distribution by any Person of assets of any
kind or character (whether in cash, securities, assets, by set-off, or otherwise
and including by purchase redemption or other acquisition).

“Event of Default” means, as the context may require, an “Event of Default” as
defined in the Senior Credit Agreement or a default or an event of default under
any Subordinated Loan Document.

“Exercise any Secured Creditor Remedies” or “Exercise of Secured Creditor
Remedies” means (a) the taking of any action to enforce any Lien in respect of
the Collateral, including the institution of any foreclosure proceedings or the
noticing of any public or private sale or other Disposition pursuant to Article
9 of the UCC or an attempt to vacate or obtain relief from a stay or other
injunction restricting any other action described in this definition, (b) the
exercise of any right or remedy provided to a secured creditor under the Senior
Loan Documents or the Subordinated Loan Documents (including, in either case,
any delivery of any notice to otherwise seek to obtain payment directly from any
account debtor of any Obligor or the taking of any action or the exercise of any
right or remedy in respect of the setoff or recoupment against the Collateral or
proceeds of Collateral), under applicable law, at equity, in an Insolvency
Proceeding or otherwise, including the acceptance of Collateral in full or
partial satisfaction of a Lien, (c) the solicitation of bids from third parties
to purchase all or a material portion of Collateral to the extent undertaken in
good faith to consummate the Disposition of such Collateral, (d) the engagement
or retention of sales brokers, marketing agents, investment bankers,
accountants, appraisers, auctioneers, or other third parties for the purposes of
valuing, marketing, or Disposing of, all or a material portion of the Collateral
to the extent undertaken in good faith to consummate the Disposition of such
Collateral, (e) the exercise of any other enforcement right relating to the
Collateral (including the exercise of any voting rights relating to any capital
stock composing a portion of the Collateral) whether under the Senior Loan
Documents, the Subordinated Loan Documents, under applicable law of any
jurisdiction, in equity, in an Insolvency Proceeding, or otherwise, (f) the
pursuit of Senior Default Dispositions relative to all or a material portion of
the Collateral, to the extent undertaken in good faith to consummate the
Disposition of such Collateral or (g) the setoff or recoupment against or
foreclosure on the Collateral or the proceeds of Collateral.

“Guarantors” means each Person that is a guarantor of the Senior Obligations or
the Subordinated Obligations.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including any conditional sale or title retention
arrangement, any Capital Lease and any assignment, deposit arrangement or
financing lease intended as, or having the effect of, security.

 

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“Motor Vehicle Notation” means each certificate of title or certificate of
origin or similar instrument issued to evidence ownership of a motor vehicle (as
defined under applicable state law) by any Grantor and upon which the Lien in
favor of the Senior Agent is noted thereon.

“Non-Payment Blockage Period” means the period from and including the date of
receipt by the Subordinated Agent of a Non-Payment Default Notice until the
first to occur of (a) the 210th day after receipt by the Subordinated Agent of
such Non-Payment Default Notice, (b) the date on which the Senior Agent has
expressly waived or acknowledged in writing the cure of all Non-Payment Default
Events referred to in the Non-Payment Default Notice or (c) the Discharge of the
Senior Obligations.

“Non-Payment Default Event” has the meaning specified in Section 2(c).

“Non-Payment Default Notice” means a written notice from Senior Agent to the
Subordinated Agent of the existence of a Non-Payment Default Event and
specifically designating such notice as a “Non-Payment Default Notice.”

“Obligors” means the Borrower, the Guarantors, and each other Person that may
from time to time execute and deliver a Senior Loan Document or a Subordinated
Loan Document as a “debtor”, “borrower”, “guarantor”, “obligor”, “grantor”, or
“pledgor” (or the equivalent thereof), and “Obligor” means any one of them.

“Payment Blockage Period” means, with respect to any Payment Default Event, the
period from and including the date of the occurrence of the Payment Default
Event until the earlier of (a) the date on which the Subordinated Agent receives
a written waiver of (or acknowledgment of the cure of) the Payment Default Event
from the Senior Agent or (b) the Discharge of the Senior Obligations.

“Payment Default Event” has the meaning specified in Section 2(c).

“Permitted Subordinated Debt Payments” means (a) regularly scheduled quarterly
payments of principal and interest (including PIK Interest but excluding default
interest payable in cash) on the Subordinated Obligations, (b) payments in the
form of Reorganization Securities, and (c) reimbursement of out-of-pocket costs
and expenses due and owing to any Subordinated Claimholder in accordance with
the terms of the Subordinated Loan Documents, provided, in the case of each of
clauses (a), (b) and (c), (i) only if such payments are payments made in
accordance with the terms of the Subordinated Loan Documents and (ii) only if
such payments are not made from Proceeds of any Collateral arising from the
Exercise of Secured Creditor Remedies or otherwise in violation of the terms of
this Agreement.

“Person” means any natural person, corporation, limited liability company,
limited partnership, general partnership, limited liability partnership, joint
venture, trust, land trust, business trust, or other organization, irrespective
of whether such organization is a legal entity, and shall include a government
and any agency or political subdivision thereof.

“PIK Interest” means regularly scheduled payments of interest on the outstanding
Subordinated Obligations payable in kind (including by capitalizing such
interest as principal) at the non-default paid in kind rate of interest in
accordance with the Subordinated Loan Documents in effect on the date hereof, as
the same may be increased to the extent permitted pursuant to the terms hereof.

 

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“Proceeds” means (a) all “proceeds” as defined in Article 9 of the UCC with
respect to the Collateral, and (b) whatever is recoverable or recovered when
Collateral is sold, exchanged, collected, or Disposed of, whether voluntarily or
involuntarily.

“Purchase Notice” has the meaning set forth in Section 9(a) of this Agreement.

“Purchasing Subordinated Claimholders” has the meaning set forth in Section 9(b)
of this Agreement.

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew,
defease, supplement, restructure, replace, refund or repay, or to issue other
indebtedness in exchange or replacement for such indebtedness, in whole or in
part, whether with the same or different lenders, arrangers or agents.
“Refinanced” and “Refinancing” shall have correlative meanings.

“Reorganization Securities” means any debt or equity securities of any Obligor
or any other Person, which securities are provided for by a plan of
reorganization, composition, arrangement, adjustment or readjustment of such
Obligor, which plan has been adopted pursuant to a proceeding under the
Bankruptcy Code or other federal or state judicial proceeding and confirmed or
approved by the court having jurisdiction of such proceeding; provided that
(a) in the case of equity securities, if such equity securities provide for
mandatory redemption or mandatory dividend payments, the payment thereof shall
be subordinated in right of payment, at least to the extent provided in this
Agreement with respect to the Subordinated Obligations, to the payment of all
Senior Obligations and to the payment of all debt or equity securities issued in
exchange for the Senior Obligations to the holders of Senior Obligations, and
(b) in the case of debt securities, any payment in respect of such debt
securities shall be subordinated in right of payment, at least to the extent
provided in this Agreement with respect to the Subordinated Obligations, to the
payment of all Senior Obligations and to the payment of all debt or equity
securities issued in exchange for the Senior Obligations to the holders of
Senior Obligations.

“Senior Agent” has the meaning set forth in the preamble to this Agreement.

“Senior Claimholders” means, at any relevant time, individually and
collectively, the Senior Agent, the Senior Lenders, or any other holders of the
Senior Obligations at that time.

“Senior Collateral Documents” means the Security Agreement (as defined in the
Senior Credit Agreement), the Senior Mortgages and any other agreement,
document, or instrument pursuant to which a Lien is granted securing any Senior
Obligation or under which rights or remedies with respect to such Liens are
governed.

“Senior Credit Agreement” has the meaning set forth in the recitals to this
Agreement.

 

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“Senior Debt Cap” means the sum of (a) $56,250,000, plus (b) 125% of the amount
of incremental facility commitments or loans incurred under the Senior Credit
Agreement, as in effect on the date hereof, plus (c) the amount of any unpaid
accrued interest, paid in kind amounts, premiums, fees or expenses accruing in
respect of or attributable to the foregoing.

“Senior Default Disposition” has the meaning set forth in Section 3(b)(4).

“Senior Guaranty” has the meaning set forth in the recitals to this Agreement.

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

“Senior Loan Documents” means the Senior Credit Agreement, the Senior Guaranty,
the Senior Collateral Documents and each of the other Loan Documents (as such
term is defined in the Senior Credit Agreement).

“Senior Mortgages” means each mortgage, deed of trust, and other document or
instrument under which any Lien on real property owned or leased by any Obligor
is granted to secure any Senior Obligations or under which rights or remedies
with respect to any such Liens are governed.

“Senior Obligations” means all Obligations (as defined in the Senior Credit
Agreement) and all other amounts owing, due, or secured under the terms of the
Senior Credit Agreement or any other Senior Loan Document, including all
principal, premium, interest, fees, attorneys’ fees, costs, charges, expenses,
reimbursement obligations, any other indemnities, or guarantees, and all other
amounts payable under any Senior Loan Document or in respect thereof (including,
in each case, all amounts accruing on or after the commencement of any
Insolvency Proceeding relating to any Obligor, or that would have accrued or
become due under the terms of the Senior Loan Documents but for the effect of
the Insolvency Proceeding or other applicable law, and irrespective of whether a
claim for all or any portion of such amounts is allowable or allowed in such
Insolvency Proceeding); provided, however, that in no event shall the amount of
the Senior Obligations, as of any date of determination exceed the Senior Debt
Cap.

“Senior Recovery” has the meaning set forth in Section 5(h).

“Subordinated Agent” has the meaning set forth in the preamble to this
Agreement.

“Subordinated Claimholders” means, at any relevant time, individually and
collectively, the Subordinated Agent and any other holders of the Subordinated
Obligations from time to time.

“Subordinated Collateral Documents” means the Security Agreement (as defined in
the Subordinated Credit Agreement), the Subordinated Mortgages and any other
agreement, document, or instrument pursuant to which a Lien is granted securing
any Subordinated Obligation or under which rights or remedies with respect to
such Liens are governed.

“Subordinated Credit Agreement” has the meaning set forth in the recitals to
this Agreement.

 

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“Subordinated Guaranty” has the meaning set forth in the recitals to this
Agreement.

“Subordinated Loan Documents” means the Subordinated Credit Agreement, the
Subordinated Guaranty, the Subordinated Collateral Documents and the other
documents, instruments, or agreements executed in connection therewith, as
amended, restated, supplemented, or otherwise modified in accordance with the
provisions of this Agreement.

“Subordinated Mortgages” means each mortgage, deed of trust, and other document
or instrument under which any Lien on real property owned or leased by any
Obligor is granted to secure any Subordinated Obligations or under which rights
or remedies with respect to any such Liens are governed.

“Subordinated Obligations” means collectively, all Obligations (as defined in
the Subordinated Credit Agreement) and all other amounts owing, due, or secured
under the terms of the Subordinated Credit Agreement, or any other Subordinated
Loan Document, whether now existing or arising hereafter, including all
principal, premium, interest, fees, attorneys’ fees, costs, charges, expenses,
reimbursement obligations, indemnities, guarantees, and all other amounts
payable under or secured by any Subordinated Loan Document or in respect thereof
(including, in each case, all amounts accruing on or after the commencement of
any Insolvency Proceeding relating to any Obligor, or that would have accrued or
become due under the terms of the Subordinated Loan Documents but for the effect
of the Insolvency Proceeding or other applicable law, and irrespective of
whether a claim for all or any portion of such amounts is allowable or allowed
in such Insolvency Proceeding).

“Subsidiary” of a person means a corporation, partnership, limited liability
company, or other entity in which that person directly or indirectly owns or
controls the shares of capital stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

“Triggering Event” means (a) the acceleration of any Senior Obligations,
(b) delivery of notice by the Senior Agent to any Obligor regarding a proposed
Exercise of Secured Creditor Remedies with respect to all or a material portion
of the Collateral or (c) commencement of an Insolvency Proceeding.

“UCC” means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

(b) Terms Defined in the Senior Credit Agreement. Any term used in this
Agreement and not defined in this Agreement has the meaning set forth in the
Senior Credit Agreement.

(c) Rules of Construction. The definitions of terms in this Agreement 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

 

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the word “shall.” The term “or” shall be construed to have, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
Unless the context requires otherwise: (1) except as otherwise provided herein,
any definition of or reference to any agreement, instrument, or other document
herein shall be construed as referring to such agreement, instrument, or other
document as from time to time amended, restated, modified or Refinanced; (2) any
definition of or reference to Senior Obligations or the Subordinated Obligations
herein shall be construed as referring to the Senior Obligations or the
Subordinated Obligations (as applicable) as from time to time amended, restated,
modified or Refinanced; (3) any reference herein to any person shall be
construed to include such person’s successors and assigns; (4) 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; (5) all references herein to Sections shall be construed to
refer to Sections of this Agreement; (6) 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 (7) any reference to any agreement,
instrument, or other document herein “as in effect on the date hereof” shall be
construed as referring to such agreement, instrument, or other document without
giving effect to any amendment, restatement, supplement, modification, or
Refinance after the date hereof.

2. Payment Subordination.

(a) Subordination. Except as set forth in Section 2(b), unless and until the
Discharge of the Senior Obligations shall have occurred, no Subordinated
Claimholder shall accept, take, or receive by payment or prepayment, directly or
indirectly, from any Obligor or any other Person any Distribution which may now
or hereafter be owing to such Subordinated Claimholder on account of any of the
Subordinated Obligations.

(b) Permitted Payments. So long as no Blockage Period is in effect, the Borrower
may pay to the Subordinated Claimholders, and the Subordinated Claimholders may
accept and receive on account of the Subordinated Obligations, Permitted
Subordinated Debt Payments.

(c) Blockage Period.

(1) Payment Default Event. If any Obligor shall default in the payment of any
Senior Obligations when the same becomes due and payable which default
constitutes an Event of Default under any of the Senior Loan Documents, whether
at maturity or at a date fixed for scheduled payment or by declaration or
acceleration or otherwise (a “Payment Default Event”), then no Obligor shall
make, and no Subordinated Claimholder shall accept, take or receive by payment
or prepayment, directly or indirectly from any Obligor or any other Person any
Distribution which may now or hereafter be owing to such Subordinated
Claimholder on account of any of the Subordinated Obligations during the Payment
Blockage Period applicable to such Payment Default Event.

(2) Non-Payment Default Event. If (i) a Default or Event of Default (other than
a Payment Default Event) shall have occurred and be continuing under any of the
Senior Loan Documents (a “Non-Payment Default Event”), and (ii) the Subordinated
Agent shall

 

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have received a Non-Payment Default Notice, then no Obligor shall make, and no
Subordinated Claimholder shall accept, take or receive, by payment or
prepayment, directly or indirectly from any Obligor or any other Person any
Distribution which may now or hereafter be owing to such Subordinated
Claimholder on account of any of the Subordinated Obligations during the
Non-Payment Blockage Period applicable to such Non-Payment Default Event;
provided that (a) no more than two Non-Payment Default Notices may be given in
any 365-day period, (b) the aggregate duration of Non-Payment Blockage Periods
in any 365-day period shall not exceed 210 days, and (c) no Non-Payment Default
Event existing at the same of the giving of a Non-Payment Default Notice may be
used as a basis for any subsequent Non-Payment Default Notice.

(3) Notwithstanding the foregoing, the existence of a Blockage Period shall not
prevent Subordinated Claimholders from receiving (x) expense reimbursements,
(y) payments of PIK Interest and (z) distribution of Reorganization Securities,
in each case, to the extent constituting Permitted Subordinated Debt Payments.

3. Lien Subordination.

(a) Acknowledgement; Consent; and Subordination. The Subordinated Agent and each
of the other Subordinated Claimholders hereby (y) acknowledges that the
Obligors, either prior to the date hereof or concurrently herewith, have granted
or are granting Liens on the Collateral in favor of the Senior Agent to secure
the Senior Obligations and (z) consents, anything to the contrary contained in
the Subordinated Loan Documents notwithstanding, to the grant by the Obligors of
the Liens on the Collateral to secure the Senior Obligations. Notwithstanding
(i) the date, time, method, manner or order of grant, attachment, or perfection
of any Liens granted to the Senior Agent (or any Senior Lender) or any
Subordinated Claimholder in respect of all or any portion of the Collateral,
(ii) the order or time of filing or recordation of any document or instrument
for perfecting the Liens in favor of the Senior Agent (or any Senior Lender) or
any Subordinated Claimholder in any Collateral, (iii) any provision of the UCC,
any other applicable law, any of the Senior Loan Documents or any of the
Subordinated Loan Documents, (iv) whether the Liens securing the Senior
Obligations are valid, enforceable, void, avoidable, subordinated, disputed, or
allowed, or (v) any other circumstance whatsoever, the Senior Agent, on behalf
of itself and the Senior Claimholders, and the Subordinated Agent and each of
the other Subordinated Claimholders hereby agree that:

(1) any Lien with respect to all or any portion of the Collateral securing any
Senior Obligations now or hereafter held by or on behalf of, or created for the
benefit of, any Senior Claimholder or any agent or trustee therefor, regardless
of how acquired, whether by grant, possession, statute, operation of law,
subrogation, or otherwise, shall be senior in all respects and prior to any Lien
with respect to all or any portion of the Collateral securing any Subordinated
Obligations; and

(2) any Lien with respect to all or any portion of the Collateral securing any
Subordinated Obligations now or hereafter held by or on behalf of, or created
for the benefit of any Subordinated Claimholder or any agent or trustee therefor
regardless of how acquired, whether by grant, possession, statute, operation of
law, subrogation, or otherwise, shall be junior and subordinate in all respects
to all Liens with respect to all or any portion of the Collateral securing any
Senior Obligations.

 

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(b) Disposition of Collateral; Release of Liens.

(1) Exclusive Rights of Senior Agent. Until the Discharge of the Senior
Obligations occurs, the Senior Agent, on behalf of the Senior Claimholders,
shall have the exclusive right to make determinations regarding the release or
Disposition of any Collateral pursuant to the terms of the Senior Loan Documents
or in accordance with the provisions of this Agreement, in each case without any
consultation with, consent of or notice to the Subordinated Agent or any other
Subordinated Claimholder.

(2) Lien Release Upon Disposition of Collateral in Exercise of Secured Creditor
Remedies. Until the Discharge of the Senior Obligations occurs, if any Exercise
of Secured Creditor Remedies by the Senior Agent results in a Disposition of any
Collateral, then the Liens, if any, of the Subordinated Agent or any other
Subordinated Claimholder on such Collateral, and the obligations of such Obligor
under its guarantee or otherwise in respect of the Subordinated Obligations,
shall be automatically, unconditionally, and simultaneously released (and, if
the Exercise of Secured Creditor Remedies results in a Disposition of equity
interests in any Obligor, the Persons whose equity interests are Disposed of
(including each Subsidiary of each such Person) shall be automatically,
unconditionally, and simultaneously released from all of their obligations under
the Subordinated Loan Documents); provided that (a) the Senior Agent also
releases its Liens on such Collateral (and, if the Exercise of Secured Creditor
Remedies results in a Disposition of equity interests in any Obligor, the Senior
Agent also releases such Persons whose equity interests are Disposed of
(including each Subsidiary of each such Person) from all of their obligations
under the Senior Loan Documents) and (b) the net proceeds of such Disposition
are applied substantially concurrently with such Disposition to the repayment of
the Senior Obligations. The Subordinated Agent, for itself and on behalf of any
such Subordinated Claimholders, promptly shall execute and deliver to the Senior
Agent such termination or amendment statements, releases, and other documents as
the Senior Agent may request to effectively confirm such release.

(3) Lien Release Upon Disposition of Collateral Permitted by Senior Loan
Documents and the Subordinated Loan Documents. Until the Discharge of the Senior
Obligations occurs, if, in connection with any Disposition of any Collateral
permitted under the terms of the Senior Loan Documents and the Subordinated Loan
Documents, in each case as in effect as of the date hereof, the Senior Agent,
for itself or on behalf of any of the other Senior Claimholders, releases any of
its Liens on the portion of the Collateral that is the subject of such
Disposition, or releases any Obligor from its obligations in respect of the
Senior Obligations (if such Obligor is the subject of such Disposition), in each
case other than in connection with (x) the Discharge of the Senior Obligations,
or (y) the Exercise of Secured Creditor Remedies by the Senior Agent (which is
addressed in Section 3(b)(2) above), then the Liens, if any, of the Subordinated
Agent or any other Subordinated Claimholder on such Collateral, and the
obligations of such Obligor in respect of the Subordinated Obligations, shall be
automatically, unconditionally, and simultaneously released. The Subordinated
Agent, for itself or on behalf of the other such Subordinated Claimholders,
promptly shall execute and deliver to the Senior Agent such termination or
amendment statements, releases, and other documents as the Senior Agent may
request to effectively confirm such release.

 

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(4) Lien Release Upon Disposition of Collateral by any Obligor After an Event of
Default. Until the Discharge of the Senior Obligations occurs, in the event of
any private or public Disposition of any Collateral by one or more of the
Obligors with the consent of the Senior Agents, on behalf of the requisite
Senior Claimholders, after the occurrence and during the continuance of an Event
of Default (as defined in either Senior Credit Agreement) (any such sale or
other disposition, a “Senior Default Disposition”), then the Liens, if any, of
the Subordinated Agent or any other Subordinated Claimholder, on such Collateral
shall be automatically, unconditionally, and simultaneously released (and, if
the Senior Default Disposition includes equity interests in any Obligor, the
Persons whose equity interests are Disposed of (including each Subsidiary of
each such Person) shall be automatically, unconditionally, and simultaneously
released from all of their obligations under the Subordinated Loan Documents);
provided that (a) the Senior Agent also releases its Liens on such Collateral
(and, if the Senior Default Disposition includes equity interests in any
Obligor, each Senior Agent also releases such persons whose equity interests are
Disposed of from all of their obligations under the applicable Senior Loan
Documents) and (b) the net proceeds of such Disposition are applied
substantially concurrently with such Disposition to the repayment of the Senior
Obligations. The Subordinated Agent, for itself or on behalf of the other such
Subordinated Claimholders, promptly shall execute and deliver to the Senior
Agent such termination or amendment statements, releases, and other documents as
the Senior Agent may request to effectively confirm such release.

The foregoing to the contrary notwithstanding, the Lien releases described in
this Section 3 shall not constitute a waiver by the Subordinated Agent and each
of the other Subordinated Claimholders of any Lien that the Subordinated Agent
or such Subordinated Claimholder may have, if any, on the Proceeds of the
Collateral that is Disposed in accordance with the terms of this Agreement prior
to the time that such Proceeds are applied to pay the Senior Obligations or the
Subordinated Obligations in accordance with the terms of this Agreement.
Furthermore, to the extent the Liens on the Collateral disposed of in accordance
with this Section 3(b) securing Senior Obligations is subsequently reinstated,
the Liens on such Collateral securing Subordinated Obligations shall be likewise
reinstated, subject to the priorities set forth in this Agreement.

(c) Waiver of Right to Contest Obligations and Liens. The Senior Agent, for
itself and on behalf of each other Senior Claimholder, and each Subordinated
Claimholder agree that it will not (and hereby waives any right to), directly or
indirectly, contest or support any other person in contesting, in any proceeding
(including any Insolvency Proceeding), (i) the validity, priority,
enforceability or allowance of any claims of any of the Senior Claimholders or
any of the Subordinated Claimholders, as the case may be, (ii) the priority,
validity, or enforceability of a Lien held by or on behalf of any of the Senior
Claimholders in any Collateral or (subject to the terms of this Agreement) by or
on behalf of any of the Subordinated Claimholders in any Collateral, as the case
may be, or (iii) the validity or enforceability of the provisions of this
Agreement; provided, however that nothing in this Agreement shall be construed
to prevent or impair the rights of the Senior Agent, any other Senior
Claimholder, the Subordinated Agent or any other Subordinated Claimholder to
enforce the terms of this Agreement.

 

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(d) New Liens. So long as the Discharge of the Senior Obligations has not
occurred, the parties hereto agree that no Obligor shall grant or permit any
additional Liens on any asset to secure any Subordinated Obligations unless such
Obligor grants a Lien on such asset to secure the Senior Obligations
concurrently with the grant of a Lien thereon in favor of the Subordinated
Agent. To the extent that the foregoing provision is not complied with for any
reason (and without limiting any other rights and remedies available to the
Senior Agent or any of the other Senior Claimholders), each Subordinated
Claimholder agrees that any amounts received by or distributed to any of them
pursuant to or as a result of Liens granted in contravention of this
subsection (d) shall be subject to Section 10(b). So long as the Discharge of
the Subordinated Obligations has not occurred, the parties hereto agree that no
Obligor shall grant or permit any additional Liens on any asset to secure any
Senior Obligations unless such Obligor grants a Lien on such asset to secure the
Subordinated Obligations concurrently with the grant of a Lien thereon in favor
of the Senior Agent.

(e) Agent for Perfection. The Senior Agent and the Subordinated Agent each agree
to hold (or cause to be held) all Control Collateral in their respective
possession, custody, or control, including “control” within the meaning of 9-104
of the UCC (or in the possession, custody, or control of agents, bailees, or
other similar third parties) as non-fiduciary agent for the benefit and on
behalf of the other solely for the purpose of perfecting the security interest
granted to each in such Control Collateral subject to the terms and conditions
of this Agreement (such bailment and agency being intended, among other things,
to satisfy the requirements of Section 8-301(a)(2), 9-313(c), 9-104, 9-105,
9-106, and 9-107 of the UCC). None of the Senior Claimholders or the
Subordinated Claimholders, as applicable, shall have any obligation whatsoever
to the others to assure that the Control Collateral is genuine or owned by any
Obligor or any other Person or to preserve their respective rights or benefits
or those of any Person. The duties or responsibilities of the Senior Agent and
the Subordinated Agent under this subsection (e) are and shall be limited solely
to holding or maintaining control of the Control Collateral as non-fiduciary
agent for the other for purposes of perfecting the Lien held by the Senior Agent
or the Subordinated Agent, as applicable. The Senior Agent is, and shall, not be
deemed to be a fiduciary of any kind for the Subordinated Agent or any other
Person. Each of the Subordinated Claimholders, by its acceptance hereof, hereby
further designates and appoints the Senior Agent its collateral agent in respect
of motor vehicle titles, and transfers to the Senior Agent the respective rights
of each other Subordinated Claimholder to receive, hold, administer and enforce
the Motor Vehicle Notations, or any one of them, as collateral agent on behalf
of the Subordinated Claimholders, and to take such action as collateral agent
and to exercise such powers respecting the Motor Vehicle Notations as are
delegated to a secured party under such Motor Vehicle Notations or by applicable
law, together with such powers that are reasonably incidental thereto. The
Senior Agent hereby declares that it accepts the trust hereby created for the
limited purpose of holding the Motor Vehicle Notations and exercising remedies
thereunder and agrees to perform such trust for the use and benefit of the
Subordinated Claimholders on the terms set forth herein; subject, however, to
other provisions of this Section.

(f) Insurance. Until the Discharge of the Senior Obligations occurs, the Senior
Agent and the other Senior Claimholders shall have the sole and exclusive right,
subject to the rights of the Obligors under the Senior Loan Documents, to adjust
and settle any claim under any insurance policy covering the Collateral in the
event of any loss thereunder and to approve any award granted in any
condemnation or similar proceeding (or any deed in lieu of

 

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condemnation) affecting the Collateral. All proceeds of any such insurance
policy and any such award (or any payments with respect to a deed in lieu of
condemnation) shall be paid, subject to the rights of the Obligors under the
Senior Loan Documents, first in accordance with the priorities set forth in
Section 10(c), until paid in full in cash, and second, to the owner of the
subject property, such other Person as may be entitled thereto, or as a court of
competent jurisdiction may otherwise direct. If any Subordinated Claimholder
shall, at any time, receive any proceeds of any such insurance policy or any
such award or payment in contravention of this subsection (f), it shall pay such
proceeds over to the Senior Agent in accordance with the terms of Section 10(c).

4. Remedies Standstill.

(a) Claim Standstill. No Subordinated Claimholder shall take any Collection
Action with respect to any of the Subordinated Obligations, except as permitted
in this Section 4(a) and in Section 4(d). Each Subordinated Claimholder shall
give the Senior Agent prompt written notice of the occurrence of any Event of
Default under any Subordinated Loan Document as required by Section 7(b) hereof.
Upon receipt by the Subordinated Agent of a Claim Standstill Notice from the
Senior Agent, then no Subordinated Claimholder may take any Collection Action
with respect to the Subordinated Obligations during the Claim Standstill Period.
Upon the expiration of the Claim Standstill Period and upon providing the Senior
Agent with five (5) Business Days’ prior written notice, subject to Section 4(b)
hereof, a Subordinated Claimholder may exercise any Collection Action.

(b) Collateral Standstill. Until the Discharge of the Senior Obligations has
occurred, whether or not any Insolvency Proceeding has been commenced by or
against any Obligor, the Subordinated Agent and the Subordinated Claimholders:

(1) shall not exercise or seek to exercise any right or remedies with respect to
any Collateral (including any Exercise of Secured Creditor Remedies);

(2) shall not contest, protest, or object to any Exercise of Secured Creditor
Remedies by any Senior Claimholder, and the Subordinated Agent and the
Subordinated Claimholders have no right to direct the Exercise of any Secured
Creditor Remedies or other action under the Senior Loan Documents; and

(3) shall not object to (and waive any and all claims with respect to) the
forbearance by any Senior Claimholder from Exercising any Secured Creditor
Remedies.

(c) Exclusive Enforcement Rights. Until the Discharge of the Senior Obligations
has occurred, whether or not any Insolvency Proceeding has been commenced by or
against any Obligor, the Senior Claimholders shall have the exclusive right to
enforce rights, Exercise Secured Creditor Remedies and make determinations
regarding the release, disposition, or restrictions with respect to the
Collateral without any consultation with, or the consent of, any Subordinated
Claimholder. In connection with the Exercise of Secured Creditor Remedies, the
Senior Claimholders may enforce the provisions of the Senior Loan Documents and
exercise remedies thereunder, all in such order and in such manner as they may
determine in the exercise of their sole discretion. Such exercise and
enforcement shall include the rights of an agent appointed by them to sell or
otherwise Dispose of Collateral, to incur expenses in connection with such
Disposition, and to exercise all the rights and remedies of a secured creditor
under the laws of any applicable jurisdiction.

 

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(d) Permitted Actions by Subordinated Claimholders. Notwithstanding anything to
the contrary in this Section 4, the Subordinated Agent and any other
Subordinated Claimholder may take any of the following actions:

(1) if an Insolvency Proceeding has been commenced by or against any Obligor,
file a claim or statement of interest with respect to the Subordinated
Obligations;

(2) take any action (not adverse to the priority status of the Liens on the
Collateral securing any of the Senior Obligations, or the rights of any Senior
Claimholder to Exercise any Secured Creditor Remedies) in order to perfect its
Lien in and to the Collateral to the extent not prohibited by Section 3(d);

(3) file any necessary responsive or 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
Subordinated Agent or any Subordinated Claimholder, including any claims secured
by the Collateral, if any;

(4) vote on any plan of reorganization (so long as such Subordinated Claimholder
does not vote in favor of a plan of reorganization that is inconsistent with the
priorities or other provisions of this Agreement), file any proof of claim, make
other filings and motions that are, in each case, in accordance with, the terms
of this Agreement, with respect to the Subordinated Obligations and the
Collateral;

(5) join (but not exercise any control with respect to) any judicial foreclosure
proceeding or other judicial lien enforcement proceeding with respect to the
Collateral initiated by the Senior Agent to the extent that any such action
could not reasonably be expected, in any material respect, to restrain, hinder,
limit, delay for any material period or otherwise interfere with the Exercise of
Secured Creditor Remedies by the Senior Agent (it being understood that no
Subordinated Claimholder shall be entitled to receive any proceeds thereof
unless otherwise expressly permitted herein); and

(6) bid for or purchase Collateral at any public, private, or judicial
foreclosure upon such Collateral initiated by any Senior Claimholder, or any
sale of Collateral during an Insolvency Proceeding; provided that such bid may
not include a “credit bid” in respect of any Subordinated Obligations unless the
proceeds of such bid are sufficient to cause the Discharge of Senior Obligations
in full, in cash immediately upon closing.

(e) Collateral or Proceeds Received from the Exercise of Secured Creditor
Remedies. Each Subordinated Claimholder agrees that until the Discharge of the
Senior Obligations has occurred, any Collateral or proceeds thereof received
from the Exercise of Secured Creditor Remedies will be subject to Section 10(b).

 

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(f) No Hindrance. Each Subordinated Claimholder hereby:

(1) agrees that the Subordinated Agent and the other Subordinated Claimholders
will not take any action, other than as expressly permitted under this
Agreement, that would restrain, hinder, limit, delay, or otherwise interfere
with the Exercise of Secured Creditor Remedies by the Senior Agent or any other
Senior Claimholder, or any action that is otherwise prohibited hereunder;

(2) waives any and all rights the Subordinated Agent or any other Subordinated
Claimholder may have as a junior lien creditor to object to the manner in which
the Senior Agent or any of the other Senior Claimholders, seek to enforce or
collect the Senior Obligations or the Liens securing the Senior Obligations
granted in any of the Collateral undertaken in good faith in accordance with
this Agreement, regardless of whether any action or failure to act by or on
behalf of the Senior Agent or any other Senior Claimholder is adverse to the
interest of the Subordinated Agent or any other Subordinated Claimholder; and

(3) acknowledges and agrees that no covenant, agreement or restriction contained
in the Subordinated Loan Documents (other than this Agreement) shall be deemed
to restrict in any way the rights and remedies of the Senior Agent or the other
Senior Claimholders with respect to the Collateral as set forth in this
Agreement and the Senior Loan Documents.

(g) Judgment Liens. In the event that any Subordinated Claimholder becomes a
judgment Lien creditor in respect of Collateral as a result of its enforcement
of its rights as an unsecured creditor, to the extent permitted herein, with
respect to the Subordinated Obligations, such judgment Lien shall be subject to
the terms of this Agreement for all purposes (including in relation to the
Senior Obligations) as the other Liens securing the Subordinated Obligations are
subject to this Agreement.

5. Insolvency Proceeding.

(a) Enforceability and Continuing Priority. This Agreement shall be applicable
both before and after the commencement of any Insolvency Proceeding and all
converted or succeeding cases in respect thereof. The relative rights of the
Senior Claimholders and the Subordinated Claimholders in or to any distributions
from or in respect of any Collateral or Proceeds of Collateral shall continue
after the commencement of any Insolvency Proceeding. Accordingly, the provisions
of this Agreement are intended to be and shall be enforceable as a subordination
agreement within the meaning of Section 510 of the Bankruptcy Code.

(b) Financing. Until the Discharge of the Senior Obligations occurs, if any
Obligor shall be subject to any Insolvency Proceeding and the Senior Agent
consents to the use of cash collateral (as such term is defined in
Section 363(a) of the Bankruptcy Code; herein, “Cash Collateral”), on which the
Senior Agent has a Lien or to permit any Obligor to obtain financing provided by
any one or more Senior Claimholders or any other Person under Section 364 of the
Bankruptcy Code or any similar Bankruptcy Law (such financing, together with any
Cash Collateral use, collectively a “DIP Financing”), then each Subordinated
Claimholder agrees that, if such Cash Collateral use or DIP Financing, as
applicable, meets the applicable DIP

 

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Financing Conditions, it will consent to such Cash Collateral use and no
Subordinated Claimholder will raise any objection to such DIP Financing on the
grounds of lack of adequate protection and to the extent the Liens securing the
Senior Obligations are subordinated to or pari passu with such DIP Financing,
the Subordinated Claimholders will subordinate their Liens in the Collateral to
the Liens securing such DIP Financing. The Subordinated Claimholders agree that
no Subordinated Claimholders shall, directly or indirectly, provide, offer to
provide, or support any DIP Financing secured by a Lien senior to or pari passu
with the Liens securing the Senior Obligations unless such DIP Financing
immediately results in the Discharge of the Senior Obligations. In connection
with any DIP Financing, if any Liens on the Collateral held by the Senior
Claimholders are subject to a surcharge or are subordinated to an administrative
priority claim, a professional fee “carve out,” or fees owed to the United
States Trustee, then the Liens on the Collateral of the Subordinated
Claimholders shall also be subordinated to such interest or claim and shall
remain subordinated to the Liens on the Collateral of the Senior Claimholders
consistent with this Agreement.

(c) Sales. Until the Discharge of the Senior Obligations has occurred, each
Subordinated Claimholder agrees that it will consent, and will not object or
oppose a motion to Dispose of any Collateral free and clear of the Liens or the
claims that are in favor of the Subordinated Agent or any other Subordinated
Claimholder under Section 363 of the Bankruptcy Code (other than any objection
or opposition that could be raised by an unsecured creditor), if the Senior
Agent, on behalf of the requisite Senior Claimholders under the Senior Credit
Agreement, has consented to such Disposition of such assets; provided, that
(i) the Liens of the Subordinated Claimholders attach to the net Proceeds of the
Disposition pursuant to court order with the same priority and validity as the
Liens held by the Subordinated Claimholders on such Collateral and the Liens
remain subject to the terms of this Agreement, and (ii) the Subordinated
Claimholders may credit bid on the Collateral in any such Disposition in
compliance with section 363(k) of the Bankruptcy Code and Section 4(d) of this
Agreement.

(d) Relief from the Automatic Stay. Until the Discharge of the Senior
Obligations occurs, each Subordinated Claimholder agrees that it shall not
(i) seek (or support any other person seeking) relief from the automatic stay or
any other stay in any Insolvency Proceeding in respect of the Collateral,
without the prior written consent of the Senior Agent or (ii) oppose any request
by the Senior Agent or any other Senior Claimholder for relief from the
automatic stay or any other stay in any Insolvency Proceeding in respect of the
Collateral.

(e) Adequate Protection.

(1) Senior Claimholders. In any Insolvency Proceeding involving an Obligor, each
Subordinated Claimholder agrees that none of them shall contest (or support any
other person contesting):

(A) any request by the Senior Agent or any of the other Senior Claimholders for
adequate protection (whether in the form of payments, liens, a priority
administrative expense claim, or otherwise);

(B) any objection by the Senior Agent or any of the other Senior Claimholders to
any motion, relief, action, or proceeding based on the Senior Agent or any of
the other Senior Claimholders claiming a lack of adequate protection (whether in
the form of payments, liens, a priority administrative expense claim, or
otherwise); or

 

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(C) the payment of interest, fees, expenses, or other amounts to the Senior
Agent or any other Senior Claimholder under Section 506(b) or 506(c) of the
Bankruptcy Code or otherwise.

(2) Subordinated Claimholders. In any Insolvency Proceeding involving an
Obligor:

(A) Replacement Liens.

(i) Until the Discharge of the Senior Obligations occurs, if any one or more
Senior Claimholders are granted adequate protection in the form of a replacement
Lien (on existing or future assets of the Obligors) in connection with any DIP
Financing or use of Cash Collateral, then the Subordinated Claimholders shall
also be entitled to seek, without objection from the Senior Claimholders,
adequate protection in the form of a replacement Lien (on existing or future
assets of the Obligors), which replacement Lien, if obtained, shall be
subordinate to the Liens securing the Senior Obligations and the Liens securing
such DIP Financing and any Liens granted to Senior Claimholders as adequate
protection for use of Cash Collateral on the same basis as the other Liens
securing the Subordinated Obligations are subordinate to the Senior Obligations
under this Agreement.

(ii) In the event that any of the Subordinated Claimholders is granted adequate
protection in the form of a replacement Lien (on existing or future assets of
the Obligors), then the Subordinated Claimholders agree that the Senior Agent
shall also be entitled to seek, without objection from the Subordinated
Claimholders, a senior adequate protection Lien on existing or future assets of
the Obligors as security for the Senior Obligations and for any DIP Financing
provided by one or more of the Senior Claimholders. Any adequate protection Lien
on such existing or future assets securing the Subordinated Obligations shall be
subordinated (x) to the Lien on such collateral securing the Senior Obligations
and any such DIP Financing provided by the Senior Claimholders, and (y) to any
other Liens granted to the Senior Claimholders as adequate protection on the
same basis as the other Liens securing the Subordinated Obligations are so
subordinated to such Senior Obligations under this Agreement.

(iii) If any one or more Senior Claimholders are granted adequate protection in
the form of an expense of administration claim or superpriority claim in
connection with any DIP Financing or use of Cash Collateral, then the Senior
Agent agrees that the Subordinated Claimholders shall also be entitled to seek,
without objection from Senior Claimholders, adequate protection in the form of
an expense of administration claim or superpriority claim, which administration
or superpriority claim, if obtained, shall be subordinate to the administration
or superpriority claim of the Senior Claimholders.

 

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(iv) If any one or more Subordinated Claimholders are granted adequate
protection in the form of an expense of administration claim or superpriority
claim in connection with any use of Cash Collateral, then each Subordinated
Claimholder agrees that the Senior Agent shall also be entitled to seek, without
objection from any Subordinated Claimholder, adequate protection in the form of
an expense of administration claim or superpriority claim, which administration
or superpriority claim, if obtained, shall be senior to the administration or
superpriority claim of the Subordinated Claimholders.

(B) No Distributions. In any Insolvency Proceeding involving an Obligor, neither
the Subordinated Agent nor any of the other Subordinated Claimholders shall seek
(i) adequate protection in the form of Distributions in respect of the
Subordinated Obligations, or (ii) adequate protection in the form of
Distributions with respect to their rights to the Collateral.

(3) Allowance of Post-petition Accrual. Neither the Subordinated Agent nor any
other Subordinated Claimholder shall object to, oppose, or challenge any claim
by the Senior Agent or any other Senior Claimholder for allowance in any
Insolvency Proceeding of Senior Obligations consisting of post-petition
interest, fees, or expenses. Neither the Senior Agent nor any other Senior
Claimholders shall object to, oppose, or challenge any claim by the Subordinated
Agent or any other Subordinated Claimholders for allowance in any Insolvency
Proceeding of Subordinated Obligations consisting of post-petition interest,
fees or expenses.

(f) Section 1111(b) of the Bankruptcy Code. None of the Subordinated
Claimholders shall object to, oppose, support any objection, or take any other
action to impede, the right of any Senior Claimholder to make an election under
Section 1111(b)(2) of the Bankruptcy Code. Each Subordinated Claimholder waives
any claim it may hereafter have against any Senior Claimholder arising out of
the election by any Senior Claimholder of the application of Section 1111(b)(2)
of the Bankruptcy Code. Until the Discharge of the Senior Obligations has
occurred, each Subordinated Claimholder waives any right it may have to make an
election under Section 1111(b)(2) of the Bankruptcy Code.

(g) No Waiver. Nothing contained herein shall prohibit or in any way limit the
Senior Agent or any other Senior Claimholder from objecting in any Insolvency
Proceeding involving an Obligor to any action taken by the Subordinated Agent or
any of the other Subordinated Claimholders which is inconsistent with the terms
of this Agreement, including, if it is inconsistent with the terms of this
Agreement, the seeking by any Subordinated Claimholder of adequate protection or
the assertion by any Subordinated Claimholder of any of their rights and
remedies under the Subordinated Loan Documents. Except as restricted by the
terms of this Agreement, and subject to the terms hereof, the Subordinated Agent
and each Subordinated Claimholder may exercise during an Insolvency Proceeding
involving any Obligor any rights and remedies that the Subordinated Agent or
such Subordinated Claimholder would have as an unsecured creditor of such
Obligor in accordance with the terms of the Subordinated Loan Documents and
applicable law.

 

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(h) Avoidance Issues. If any Senior Claimholder is required in any Insolvency
Proceeding or otherwise to turn over, disgorge or otherwise pay to the estate of
any Obligor any amount paid in respect of the Senior Obligations (a “Senior
Recovery”), then such Senior Claimholder shall be entitled to a reinstatement of
Senior Obligations with respect to all such recovered amounts, and all rights,
interests, priorities and privileges recognized in this Agreement shall apply
with respect to any such Senior Recovery. If this Agreement shall have been
terminated prior to such Senior 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.

(i) Plan of Reorganization.

(1) If, in any Insolvency Proceeding involving an Obligor, debt obligations of
the reorganized debtor, whether or not secured by Liens upon any property of the
reorganized debtor, are distributed pursuant to a plan of reorganization or
similar dispositive restructuring plan, (A) on account of the Senior
Obligations, (B) on account of the Subordinated Obligations, or (C) all on
account of the Senior Obligations and the Subordinated Obligations, then the
Subordinated Claimholders shall have the right to receive such debt obligations
so long as the provisions of this Agreement (i) survive the distribution of such
debt obligations pursuant to such plan and (ii) apply with like effect to such
debt obligations and the Liens securing such debt obligations, and

(2) The Subordinated Claimholders shall not propose or support any plan of
reorganization that is inconsistent with the priorities or other provisions of
this Agreement.

(j) Prohibition of Payments of Subordinated Obligations on Acceleration or in
Insolvency Proceeding.

(1) Upon (A) any acceleration of the principal amount due on any Subordinated
Obligations which has not been rescinded or revoked, or (B) any payment or
distribution of assets of any Obligor, of any kind or character, whether in
cash, property or securities, following commencement of an Insolvency
Proceeding, there shall be a Discharge of the Senior Obligations before any
Distribution (other than Reorganization Securities) is made on account of any of
the Subordinated Obligations. Following commencement of an Insolvency
Proceeding, any Distribution in respect of the Subordinated Obligations to which
a Subordinated Claimholder would be entitled, except as otherwise provided in
this Agreement, shall be paid by any Obligor or any other Person making such
Distribution, or by any Subordinated Claimholder having received such
Distribution, directly to the Senior Agent, to the extent necessary to result in
the Discharge of the Senior Obligations, before any Distribution (other than
Reorganization Securities) on account of any Subordinated Obligation is made to
the Subordinated Agent or any other Subordinated Claimholder.

(2) In any Insolvency Proceeding by or against any Obligor,

(A) the Senior Agent may, and is hereby irrevocably authorized and empowered (in
its own name or in the name of Subordinated Claimholders or otherwise), but
shall have no obligation to (i) demand, sue for, collect and receive every
payment or distribution referred to in this Section 5 and give acquittance
therefor and (ii) file claims and proofs of claim

 

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in respect of the Subordinated Obligations, provided that the Senior Agent may
only file claims and proofs of claims in respect of the Subordinated Obligations
if (x) the Subordinated Agent has failed to file such claims and proofs of claim
and (y) there shall remain not more than ten (10) days before such action is
barred, prohibited or otherwise cannot be taken; and

(B) The Subordinated Agent and each other Subordinated Claimholder will duly and
promptly take such action as the Senior Agent may reasonably request (i) to
collect the Subordinated Obligations for the account of the Senior Claimholders
and to file appropriate claims or proofs of claim with respect thereto, (ii) to
execute and deliver to the Senior Agent such powers of attorney, assignments or
other instruments as the Senior Agent may request in order to enable it to
enforce any and all claims with respect to, and any security interests and other
liens securing payment of, the Subordinated Obligations, and (iii) to collect
and receive for the account of the Senior Claimholders any and all Distributions
(other than Reorganization Securities) which may be payable or deliverable upon
or with respect to the Subordinated Obligations, until there has been a
Discharge of the Senior Obligations.

(k) Payments Held in Trust/Turnover. In the event that, notwithstanding the
foregoing provisions of this Section 5, any Distribution in respect of the
Subordinated Obligations prohibited by this Agreement shall be received by any
Subordinated Claimholder before there has been a Discharge of the Senior
Obligations, such Distribution shall be held in trust for the benefit of and
shall be paid over to or delivered to the Senior Agent, until there has been a
Discharge of the Senior Obligations.

6. Waivers by Subordinated Claimholders.

(a) Senior Obligations.

(1) All Senior Obligations at any time incurred by any Obligor shall be deemed
to have been incurred, and all Senior Obligations held by any Senior Claimholder
shall be deemed to have been extended, acquired or obtained, as applicable, in
reliance upon this Agreement, and each Subordinated Claimholder hereby waives
(A) notice of acceptance, or proof of reliance, by any of the Senior
Claimholders of this Agreement, and (B) notice of the existence, renewal,
extension, accrual, creation, or non-payment of all or any part of the Senior
Obligations. Nothing contained in this Agreement shall preclude any of the
Senior Claimholders from discontinuing the extension of credit to any Obligor
(whether under the Senior Loan Documents or otherwise) or from taking (without
notice to any Subordinated Claimholder, any Obligor, or any other Person) any
other action in respect of the Senior Obligations or the Collateral which such
Senior Claimholder is otherwise entitled to take with respect to the Senior
Obligations or the Collateral.

(2) None of the Senior Claimholders or any of their respective affiliates,
directors, officers, employees, or agents shall be liable for failure to demand,
collect, or realize upon any of the Collateral or any Proceeds or for any delay
in doing so or shall be under any obligation to sell or otherwise Dispose of any
Collateral or Proceeds thereof or to take any other action whatsoever with
regard to the Collateral or any part or Proceeds thereof. If the Senior Agent or
any other Senior Claimholder honors (or fails to honor) a request by the
Borrower for an extension of credit pursuant to any of the Senior Loan
Documents, whether the

 

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Senior Agent or such Senior Claimholder has knowledge that the honoring of (or
failure to honor) any such request would constitute a default under the terms of
the Subordinated Loan Documents or an act, condition, or event that, with the
giving of notice or the passage of time, or both, would constitute such a
default, or if the Senior Agent or such Senior Claimholder otherwise should
exercise any of its contractual rights or remedies under the Senior Loan
Documents (subject to the express terms and conditions hereof), neither the
Senior Agent nor any Senior Claimholder shall have any liability whatsoever to
any Subordinated Claimholder as a result of such action, omission, or exercise.
The Senior Agent will be entitled to manage and supervise its loans and
extensions of credit under the Senior Loan Documents as the Senior Agent may, in
its sole discretion, deem appropriate, and the Senior Agent and each other
Senior Claimholder may manage its loans and extensions of credit without regard
to any rights or interests that any Subordinated Claimholder may have in the
Collateral or otherwise except as otherwise expressly set forth in this
Agreement. Each Subordinated Claimholder agrees that neither the Senior Agent
nor any other Senior Claimholder shall incur any liability as a result of a
sale, lease, license, application or other Disposition of all or any portion of
the Collateral or any part or Proceeds thereof. The Senior Agent and each Senior
Claimholder may, from time to time, enter into agreements and settlements with
Obligors as it may determine in its sole discretion without impairing any of the
subordinations, priorities, rights or obligations of the parties under this
Agreement, including, without limitation, substituting Collateral, releasing any
Lien and releasing any Obligor. Each Subordinated Claimholder waives any and all
rights it may have to require the Senior Agent or any other Senior Claimholder
to marshal assets, to exercise rights or remedies in a particular manner, or to
forbear from exercising such rights and remedies in any particular manner or
order.

(b) Notice of Acceptance and Other Waivers. To the fullest extent permitted by
applicable law, each Subordinated Claimholder hereby waives: (1) notice of
acceptance hereof; (2) notice of any loans or other financial accommodations
made or extended under any of the Senior Loan Documents, or the creation or
existence of any Senior Obligations; (3) notice of the amount of the Senior
Obligations; (4) notice of any adverse change in the financial condition of any
Obligor or of any other fact that might increase the Subordinated Agent’s or any
other Subordinated Claimholder’s risk hereunder; (5) notice of presentment for
payment, demand, protest, and notice thereof as to any instrument among the
Senior Loan Documents; (6) notice of any Default or Event of Default under the
Senior Loan Documents or otherwise relating to the Senior Obligations; (7) all
other notices (except if such notice is specifically required to be given to the
Subordinated Agent under this Agreement) and demands to which the Subordinated
Agent or any other Subordinated Claimholder might otherwise be entitled.

(c) Lawsuits; Defenses; Setoff. To the fullest extent permitted by applicable
law, each Subordinated Claimholder, waives (1) the right by statute or otherwise
to require the Senior Agent or any other Senior Claimholder to institute suit
against any Obligor or to exhaust any rights and remedies which the Senior Agent
or any Senior Claimholder has or may have against any Obligor; (2) any defense
arising by reason of any disability or other defense (other than the defense
that the Discharge of the Senior Obligations has occurred (subject to the
provisions of Section 5(h)) of any Obligor or by reason of the cessation from
any cause whatsoever of the liability of such Obligor in respect thereof;
(3) any rights to assert against the Senior Agent or any other Senior
Claimholder any defense (legal or equitable), set-off, counterclaim, or claim
which the Subordinated Agent or any Subordinated Claimholder may

 

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now or at any time hereafter have against any Obligor or any other party liable
to the Senior Agent, any other Senior Claimholder, the Subordinated Agent or any
other Subordinated Claimholder; (4) any defense, set-off, counterclaim, or
claim, of any kind or nature, arising directly or indirectly from the present or
future lack of perfection, sufficiency, validity, or enforceability of any
Senior Obligations, any Subordinated Obligations or any security for either;
(5) any defense arising by reason of any claim or defense based upon an election
of remedies by the Senior Agent or any other Senior Claimholder; and (6) the
benefit of any statute of limitations affecting the Subordinated Agent’s or any
other Subordinated Claimholder’s obligations hereunder or the enforcement
thereof, and any act which shall defer or delay the operation of any statute of
limitations applicable to the Senior Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to the
Subordinated Agent’s or such Subordinated Claimholder’s obligations hereunder.

(d) Subrogation. Solely after the Discharge of the Senior Obligations shall have
occurred, the Subordinated Agent and the other Subordinated Claimholders shall
be subrogated to the rights of the Senior Agent and the other Senior
Claimholders to the extent that distributions otherwise payable to the
Subordinated Claimholders have been applied to the payment of the Senior
Obligations in accordance with the provisions of this Agreement. The Senior
Agent and the other Senior Claimholders shall have no obligation or duty to
protect any Subordinated Claimholder’s rights of subrogation arising pursuant to
this Agreement or under any applicable law, nor shall the Senior Agent or any
other Senior Claimholder be liable for any loss to, or impairment of, any
subrogation rights held by any Subordinated Claimholder.

(e) ELECTION OF REMEDIES. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH SUBORDINATED CLAIMHOLDER
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS AND DEFENSES ARISING
OUT OF AN ELECTION OF REMEDIES BY THE SENIOR AGENT AND THE OTHER SENIOR
CLAIMHOLDERS, EVEN THOUGH THAT ELECTION OF REMEDIES HAS DESTROYED THE RIGHTS OF
SUBROGATION OF THE SUBORDINATED AGENT AND THE OTHER SUBORDINATED CLAIMHOLDERS
AND REIMBURSEMENT AGAINST ANY OBLIGOR BY THE OPERATION OF ANY APPLICABLE LAW.

7. Amendments; Refinancing, Notice of Default.

(a) Senior Loan Documents. The Senior Loan Documents may be amended, restated,
waived, supplemented, restructured or otherwise modified in accordance with
their terms and the Senior Obligations may be Refinanced, in each case without
notice to, or the consent of, Subordinated Agent or any Subordinated
Claimholder, all without affecting the lien subordination or other provisions of
this Agreement; provided, however, that no such amendment, restatement,
Refinancing or other modification is to (1) increase the maximum principal
amount of the Senior Obligations to an amount in excess of the Senior Debt Cap,
(2) increase the rate of interest on any of the Senior Obligations to a rate in
excess of 3.00% per annum above the interest rate set forth in the Senior Credit
Agreement (as in effect on the date hereof), except in connection with the
imposition of a default rate of interest in accordance with the terms of the
Senior Loan Documents (as in effect on the date hereof), or (3) add or modify
any direct restriction on any required payment of the Subordinated Obligations
that by its express

 

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terms conflicts with an express provision of this Agreement, without the prior
written consent of the Subordinated Agent. Any assignee or transferee of the
Senior Agent or any other Senior Claimholder shall bind themselves in a writing
for the benefit of the Subordinated Claimholders, to the terms of this
Agreement. Notwithstanding the failure to execute or deliver any such agreement
described in this Section 7(a), the subordination effected hereby shall survive
any sale, assignment, disposition or other transfer of all or any portion of the
Senior Obligations, and the terms of this Agreement shall be binding upon the
successors and assigns of the Senior Agent and each other Senior Claimholder, as
provided in Section 21 below.

(b) Subordinated Loan Documents. Each Subordinated Claimholder agrees that none
of the Subordinated Loan Documents or any other document, instrument, or
agreement evidencing all or any part of the Subordinated Obligations may be
amended, restated, supplemented, Refinanced, or otherwise modified without the
prior written consent of the Senior Agent, to the extent that such amendment,
restatement, Refinancing or other modification would (1) increase the maximum
principal amount of the Subordinated Obligations (other than as may result from
the accrual of payments-in-kind of interest or accrual of unpaid fees, expenses
and indemnities, in each case, pursuant to the terms of the Subordinated Loan
Documents) to an amount in excess of the sum of (i) $23,158,300 plus (ii) 110%
of the amount of delayed draw term loans incurred in compliance with the
Subordinated Credit Agreement (as in effect on the date hereof), (2) increase
the rate of interest (whether payable in cash or in kind) on any of the
Subordinated Obligations to a rate in excess of 2.00% per annum above the
interest rate set forth in the Subordinated Credit Agreement (as in effect on
the date hereof), except in connection with the imposition of a default rate of
interest in accordance with the terms of the Subordinated Loan Documents (as in
effect on the date hereof), (3) change or add any event of default or any
covenant with respect to the Subordinated Obligations in a manner adverse to any
Obligor or to the interests of any of the Senior Claimholders, (4) change or
amend any other term of any Subordinated Loan Document if such change or
amendment would (i) result in an “Event of Default” under any of the Senior Loan
Documents, (ii) materially increase the obligations of any Obligor, or
(iii) confer additional material rights on the Subordinated Claimholders, or
(5) amend the date upon which payments of principal or interest on the
Subordinated Obligations are due or change any redemption or prepayment
provisions of the Subordinated Obligations. Any assignee or transferee of the
Subordinated Agent or any other Subordinated Claimholder shall bind themselves
in a writing for the benefit of the Senior Claimholders, to the terms of this
Agreement. Notwithstanding the failure to execute or deliver any such agreement
described in this Section 7(b), the subordination effected hereby shall survive
any sale, assignment, disposition or other transfer of all or any portion of the
Subordinated Obligations, and the terms of this Agreement shall be binding upon
the successors and assigns of the Subordinated Agent and each other Subordinated
Claimholder, as provided in Section 21 below.

(c) Notice of Event of Default. Each Subordinated Claimholder shall give the
Senior Agent prompt written notice of the occurrence of any Event of Default
under any Subordinated Loan Document upon the earlier to occur of (1) the date
of receipt by such Subordinated Claimholder of notice of such Event of Default
from any Obligor or any other Person and (2) the date on which such Subordinated
Claimholder obtains knowledge of the existence of such Event of Default.

 

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8. When Discharge of the Senior Obligations Deemed to Not Have Occurred. If any
Obligor enters into any Refinancing of any Senior Obligations, then (a) a
Discharge of the Senior Obligations shall automatically be deemed not to have
occurred for all purposes of this Agreement, (b) the obligations under such
Refinancing of such Senior Obligations shall automatically be treated as Senior
Obligations for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Collateral set forth herein, and
(c) the agent under the loan documents in respect of such Senior Obligations
shall be the Senior Agent for all purposes of this Agreement and such Senior
Agent shall agree in writing to be bound by the terms of this Agreement.

9. Purchase Option.

(a) Without prejudice to the enforcement of the remedies of the Senior Agent and
the other Senior Claimholders, at any time during the twenty (20) day period
following the occurrence of a Triggering Event, then, in any such case, any one
or more of the Subordinated Claimholders (acting in their individual capacity or
through one or more affiliates) shall have the right, but not the obligation
(each Subordinated Claimholder having a ratable right to make the purchase, with
each Subordinated Claimholder’s right to purchase being automatically
proportionately increased by the amount not purchased by another Subordinated
Claimholder), upon ten (10) Business Days’ advance written notice from (or on
behalf of) such Subordinated Claimholders (a “Purchase Notice”) to the Senior
Agent, for the benefit of the Senior Claimholders, to acquire from the Senior
Claimholders all (but not less than all) of the right, title, and interest of
the Senior Claimholders in and to the Senior Obligations and the Senior Loan
Documents. The Purchase Notice, if given, shall be irrevocable.

(b) On the date specified in the Purchase Notice (which shall not be more than
ten (10) Business Days after the receipt by the Senior Agent of the Purchase
Notice), the Senior Claimholders shall sell to the purchasing Subordinated
Claimholders (the “Purchasing Subordinated Claimholders”) and the Purchasing
Subordinated Claimholders shall purchase from the Senior Claimholders, the
Senior Obligations.

(c) On the date of such purchase and sale, the Purchasing Subordinated
Claimholders shall (1) pay to the Senior Agent, for the benefit of the Senior
Claimholders, as the purchase price therefor the full amount of all the Senior
Obligations (other than Senior Obligations cash collateralized in accordance
with clause (c)(2) below) then outstanding and unpaid, including, for the
avoidance of doubt, any prepayment premium or early termination fee and any
amounts payable pursuant to Section 2.10(e) of the Senior Credit Agreement, if
the Senior Obligations are prepaid in full and all commitments under the Senior
Credit Agreement are terminated in full at such time, (2) furnish cash
collateral to the Senior Agent in such amounts as the Senior Agent determines is
reasonably necessary to secure the Senior Agent and the Senior Claimholders in
connection with any issued and outstanding Letters of Credit, (3) agree to
reimburse the Senior Agent and the Senior Claimholders for all expenses to the
extent earned or due and payable in accordance with the Senior Loan Documents
(including the reimbursement of extraordinary expenses, financial examination
expenses, and appraisal fees), and (4) agree to indemnify and hold harmless the
Senior Claimholders from and against any loss, liability, claim, damage or
expense (including reasonable fees and expenses of legal counsel) arising out of
any claim asserted by a third party in respect of the Senior Obligations as a
direct

 

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result of any acts by the Subordinated Agent or any other Subordinated
Claimholder occurring after the date of the purchase and sale of the Senior
Obligations, to the extent found by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Subordinated
Claimholder. Such purchase price, cash collateral, reimbursements and other
payments shall be remitted, without set-off, recoupment or counterclaim, by wire
transfer in federal funds to such bank account of the Senior Agent as the Senior
Agent may designate in writing to the Subordinated Agent for such purpose.
Interest shall be calculated to but excluding the Business Day on which such
purchase and sale shall occur if the amounts so paid by the Purchasing
Subordinated Claimholders to the bank account designated by the Senior Agent are
received in such bank account prior to 3:00 p.m., New York City time, and
interest shall be calculated to and including such Business Day if the amounts
so paid by the Purchasing Subordinated Claimholders to the bank account
designated by the Senior Agent are received in such bank account later than 3:00
p.m., New York City time.

(d) Such purchase shall be expressly made without representation or warranty of
any kind by the Senior Agent and the Senior Claimholders as to the Senior
Obligations so purchased or otherwise and without recourse to the Senior Agent
or any Senior Claimholder, except that each Senior Claimholder shall represent
and warrant: (1) that the amount quoted by such Senior Claimholder as its
portion of the purchase price represents the amount shown as owing with respect
to the claims transferred as reflected on its books and records (but without
representation or warranty as to the collectability, validity or enforceability
thereof), (2) it owns, or has the right to transfer to purchasing Subordinated
Claimholders, the rights being transferred, and (3) such transfer will be free
and clear of Liens.

(e) If the Subordinated Claimholders fail to exercise their purchase right under
this Section 9 within the twenty (20) day period described above in
Section 9(a), or fail to close the purchase within the required time period
described above in Section 9(a), the Senior Agent and the Senior Claimholders
shall have no further obligations pursuant to this Section 9.

(f) In the event that any one or more of Subordinated Claimholders exercises and
consummates the purchase option set forth in this Section 9, (1) the Senior
Agent shall have the right, but not the obligation, to immediately resign under
the Senior Credit Agreement, and (2) the purchasing Subordinated Claimholders
shall have the right, but not the obligation, to require the Senior Agent to
immediately resign under the Senior Credit Agreement.

10. Payments Held In Trust; Turnover; Application of Proceeds.

(a) Payments Held in Trust/Turnover. In the event that any Subordinated
Claimholder receives any Distribution prohibited by this Agreement, such
Distribution shall be held in trust for the benefit of and shall be paid over to
or delivered to the Senior Agent.

(b) Turnover. Whether or not any Insolvency Proceeding has been commenced by or
against any Obligor, any Collateral or proceeds thereof (including assets or
proceeds subject to Liens referred to in Section 3(d) or Section 4(g)) received
by the Subordinated Agent or any other Subordinated Claimholder (1) in
connection with the Exercise of Secured Creditor Remedies with respect to the
Collateral or otherwise, or (2) as a result of any Subordinated Claimholder’s
collusion with any Obligor in violating the rights of the Senior

 

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Agent or any other Senior Claimholder (within the meaning of Section 9-332 of
the UCC), shall be segregated and held in trust and forthwith paid over to the
Senior Agent in the same form as received, with any necessary endorsements or as
a court of competent jurisdiction may otherwise direct. The Senior Agent is
hereby authorized to make any such endorsements as agent for any Subordinated
Claimholder. This authorization is coupled with an interest and is irrevocable
until the Discharge of the Senior Obligations.

(c) Application of Proceeds. Whether or not any Insolvency Proceeding has been
commenced by or against any Obligor, any Collateral or proceeds thereof received
in connection with any Exercise of Secured Creditor Remedies and proceeds of
Collateral received pursuant to Section 3(b) (other than Section 3(b)(3)), the
application of such proceeds received pursuant to Section 3(b)(3) being governed
by the Senior Loan Documents) or Section 3(f) shall (at such time as such
Collateral or proceeds has been monetized) be applied: (1) first, to the payment
in full in cash of costs and expenses of the Senior Agent in accordance with the
Senior Loan Documents, (2) second, to the payment in full in cash of all other
Senior Obligations (or, in the case of Letters of Credit, the cash
collateralization thereof) in accordance with the Senior Loan Documents, and in
the case of payment of any revolving credit loans, together with the concurrent
permanent reduction of any revolving credit commitment thereunder in an amount
equal to the amount of such payment and (3) third, to the payment in full in
cash of the Subordinated Obligations in accordance with the Subordinated Loan
Documents. If any Exercise of Secured Creditor Remedies with respect to the
Collateral produces non-cash proceeds, or if non-cash proceeds are received
pursuant to Section 3(b) or Section 3(f), then such non-cash proceeds shall be
held by the Senior Agent as additional Collateral and, at such time as such
non-cash proceeds are monetized, shall be applied as set forth above.

11. Representations. The Senior Agent represents and warrants to the
Subordinated Agent and the other Subordinated Claimholders that (a) it has the
requisite power and authority to enter into, execute, deliver, and carry out the
terms of this Agreement and (b) this Agreement, when executed and delivered,
will constitute the valid and legally binding obligation of the Senior Agent
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
equitable principles. The Subordinated Agent represents and warrants that (i) it
has the requisite power and authority to enter into, execute, deliver, and carry
out the terms of this Agreement, and (ii) this Agreement, when executed and
delivered, will constitute the valid and legally binding obligation of the
Subordinated Agent enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by equitable principles.

12. Amendments. No amendment or waiver of any provision of this Agreement nor
consent to any departure by any party hereto shall be effective unless it is in
a written agreement executed by the Senior Agent and the Subordinated Agent, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

13. Instrument Legends. Any promissory note or other instrument evidencing any
of the Subordinated Obligations shall at all times include the following
language (or language to similar effect approved by the Senior Agent):

 

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“Anything herein to the contrary notwithstanding, the liens and security
interests securing the obligations evidenced by this promissory note, the
exercise of any right or remedy with respect thereto, and certain of the rights
of the holder hereof are subject to the provisions of the Subordination and
Intercreditor Agreement dated as of August 7, 2017 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Subordination
Agreement”), by and among ACF FINCO I LP, as Senior Agent, and WILMINGTON
SAVINGS FUND SOCIETY, FSB, as Subordinated Agent. In the event of any conflict
between the terms of the Subordination Agreement and this promissory note, the
terms of the Subordination Agreement shall govern and control.”

14. Additional Remedies. If the Subordinated Agent or any Subordinated
Claimholder violates any of the terms of this Agreement, in addition to any
remedies in law, equity, or otherwise, the Senior Agent may restrain such
violation in any court of law and may, in its own or in any Obligor’s name,
interpose this Agreement as a defense in any action by the Subordinated Agent or
such Subordinated Claimholder. Upon the Senior Agent’s written request, the
Subordinated Agent and each other Subordinated Claimholder will promptly take
all actions which the Senior Agent believes appropriate to carry out the
purposes and provisions of this Agreement.

15. Information Concerning Financial Condition.

(a) The Senior Agent, for itself and on behalf of the other Senior Claimholders,
hereby assumes responsibility for keeping itself informed of the financial
condition of the Obligors and of all other circumstances bearing upon the risk
of nonpayment of the Senior Obligations and agrees that the Subordinated Agent
has and shall have no duty to advise Senior Agent or any other Senior
Claimholder of information known to the Subordinated Agent or any other
Subordinated Claimholder regarding such condition or any such circumstances. In
the event that the Subordinated Agent, in its sole discretion, undertakes, at
any time or from time to time, to provide any such information to the Senior
Agent or any other Senior Claimholder, then the Subordinated Agent shall not be
under any obligation (i) to provide any such information to the Senior Agent or
any other Senior Claimholder on any subsequent occasion, (ii) to undertake any
investigation, or (iii) to disclose any information which, pursuant to its
commercial finance practices, the Subordinated Agent wishes to maintain
confidential. The Senior Agent, for itself and the other Senior Claimholders,
acknowledges and agrees that neither the Subordinated Agent nor any other
Subordinated Claimholder has made any warranties or representations with respect
to the legality, validity, enforceability, collectability or perfection of the
Subordinated Obligations or any liens or security interests held in connection
therewith.

(b) Each Subordinated Claimholder hereby assumes responsibility for keeping
itself informed of the financial condition of the Obligors and of all other
circumstances bearing upon the risk of nonpayment of the Subordinated
Obligations, and agrees that the Senior Agent has and shall have no duty to
advise the Subordinated Agent or any other Subordinated Claimholder of
information known to the Senior Agent or any Senior Claimholder regarding such
condition or any such circumstances. In the event that the Senior Agent, in its
sole discretion, undertakes, at any time or from time to time, to provide any
such information to the

 

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Subordinated Agent or any Subordinated Claimholder, then the Senior Agent shall
not be under any obligation (i) to provide any such information to the
Subordinated Agent or any other Subordinated Claimholder on any subsequent
occasion, (ii) to undertake any investigation, or (iii) to disclose any
information which, pursuant to its commercial finance practices, the Senior
Agent wishes to maintain confidential. Each Subordinated Claimholder
acknowledges and agrees that neither the Senior Agent nor any other Senior
Claimholders has made any warranties or representations with respect to the
legality, validity, enforceability, collectability or perfection of the Senior
Obligations or any liens or security interests held in connection therewith.

16. Third Party Beneficiaries. This Agreement is solely for the benefit of the
Senior Agent, the other Senior Claimholders, the Subordinated Agent, and the
other Subordinated Claimholders, and their respective successors and assigns,
and neither any Obligor nor any other Person is intended to be a third party
beneficiary hereunder or to have any right, benefit, priority or interest under,
or because of the existence of, or to have any right to enforce, this Agreement.
The Senior Agent and the Subordinated Agent shall have the right to modify or
terminate this Agreement at any time without notice to or approval of any
Obligor or any other Person.

17. Notices. For the purposes of this Agreement, all notices or demands shall be
in writing and shall be personally delivered or sent by registered or certified
mail (postage prepaid, return receipt requested), overnight courier, or
facsimile confirmed by the recipient and addressed to the notified party at its
address set forth below:

 

If to Senior Agent:    ACF FinCo I LP    Attn: Credit Officer/Nuverra
Environmental Solutions, Inc.    560 White Plains Road, Suite 400    Tarrytown,
NY 10591    Tel: (914) 418-1200    Fax: (914) 921-1154    ACF FinCo I LP   
Attn: Oleh Szczupak, Vice President    560 White Plains Road, Suite 400   
Tarrytown, NY 10591    Tel: (914) 418-1200 (ext. 216)    Fax No.: (914) 921-1154
with a copy to:    Morgan, Lewis & Bockius, LLP    101 Park Avenue    New York,
NY 10178-0060    Attn: Frederick Eisenbiegler, Esq.    Tel: (212) 309-6720   
Fax No.: (212) 309-6001

 

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If to Subordinated Agent:    Wilmington Savings Fund Society, FSB    WSFS Bank
Center    500 Delaware Avenue    Wilmington, DE 19801    Attn: Geoffrey Lewis   
Fax No.: (302) 421-9137 with a copy to:    Morrison & Foerster LLP    250 West
55th Street    New York, NY 10019    Attn: Jonathan Levine    Fax No.: (212)
468-7900

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this section, other than notices sent
in accordance with Section 9-611, 9-612, 9-613, 9-620, 9-621 or any other
applicable provision of the UCC shall be deemed received on the earlier of the
date of actual receipt or 3 days after deposit thereof in the mail. Notices sent
in connection with Section 9-611, 9-612, 9-613, 9-620, 9-621 or any other
applicable provision of the UCC shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or other similar method set forth above.

18. [Reserved].

19. Consent to Jurisdiction; Additional Waivers. The Senior Agent and each
Subordinated Claimholder each consent to the jurisdiction of any state or
federal court located within the County of New York, State of New York;
provided, however, that any suit seeking enforcement of the priorities set forth
herein against any Collateral or other property may be brought, at the Senior
Agent’s option, in the courts of any jurisdiction where the Senior Agent elects
to bring such action or where such Collateral or other property may be found.
Each Subordinated Claimholder waives personal service of any and all process
upon it, and consents that all service of process be made in the manner set
forth in Section 17 for notices. The Senior Agent and each Subordinated
Claimholder each waives, to the fullest extent each may effectively do so, any
defense or objection based upon forum non conveniens and any defense or
objection to venue of any action instituted within the County of New York, State
of New York. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT.

20. Governing Law. This Agreement has been delivered and accepted at and shall
be deemed to have been made in the State of New York, and shall be interpreted,
and the rights and liabilities of the parties hereto determined, in accordance
with the laws of the State of New York.

21. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties’ respective successors and assigns, subject to the
provisions hereof.

 

30

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22. Integrated Agreement. This Agreement sets forth the entire understanding of
the parties with respect to the within matters and may not be modified or
amended except upon a writing signed by all parties.

23. Authority. Each of the parties hereto certifies that such party has all
necessary authority to execute this Agreement.

24. Counterparts. This Agreement may be executed in one or more counterparts,
each one of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page of this Agreement or any document or
instrument delivered in connection herewith by telefacsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement or such other document or instrument, as applicable.

25. Headings. The headings contained in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.

26. Severability. Any provision of this Agreement that is prohibited by law or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision. To the extent
permissible, the parties waive any law that prohibits any provision of this
Agreement or renders any provision hereof unenforceable.

27. Conflicts. To the extent that there is a conflict or inconsistency between
any provision hereof, on the one hand, and any provision of any Subordinated
Loan Document, on the other hand, this Agreement shall control and prevail.

28. Termination. This Agreement shall continue in full force and effect until
the Discharge of the Senior Obligations shall have occurred and shall thereafter
be revived to the extent provided for in Section 5(h).

29. Shareholder Actions, etc. Notwithstanding anything herein to the contrary,
nothing in this Agreement shall prevent or restrict Subordinated Claimholders or
any of their Affiliates from exercising their rights or discharging their duties
in their capacities as equityholders of the Loan Parties or members of the
boards of directors (or similar governing bodies) of the Loan Parties.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

ACF FINCO I LP,

a Delaware limited partnership,

as Senior Agent

By:  

/s/ Oleh Szczupak

Name:   Oleh Szczupak Title:   Authorized Signatory

 

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WILMINGTON SAVINGS FUND SOCIETY, FSB,

a federal savings bank,

as Subordinated Agent

By:  

/s/ Geoffrey J. Lewis

Name:   Geoffrey J. Lewis Title:   Vice President

 

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ACKNOWLEDGEMENT

Dated as of August 7, 2017

The undersigned hereby acknowledge and consent to the foregoing Subordination
and Intercreditor Agreement, dated as of August 7, 2017 (the “Subordination
Agreement”), among ACF FINCO I LP, as the Senior Agent, and WILMINGTON SAVINGS
FUND SOCIETY, FSB, as the Subordinated Agent. Unless otherwise defined in this
Acknowledgement, terms defined in the Subordination Agreement have the same
meanings when used in this Acknowledgement.

Each Obligor agrees to be bound by the Subordination Agreement, and agrees that
any default, event of default, or unmatured event of default by any Obligor
under any present or future instrument or agreement among any Obligor and
Subordinated Claimholder shall constitute an immediate default, event of
default, and unmatured event of default under all present and future instruments
and agreements among any Obligor and any Senior Claimholder. Each Obligor agrees
to give notice to the Subordinated Agent of any Event of Default concurrently
with providing such notice to the Senior Agent. Each Obligor agrees that the
Subordination Agreement may be amended by the Senior Agent and the Subordinated
Agent without notice to, or the consent of any Obligor or any other Person.

Each Obligor agrees to be bound by the Subordination Agreement and will not do
any act or perform any obligation which is not in accordance with the agreements
set forth therein. Each Obligor further acknowledges and agrees that it is not
an intended beneficiary or third party beneficiary under the foregoing
Subordination Agreement.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned has executed and delivered this
Acknowledgment as of the date first written above.

 

NUVERRA ENVIRONMENTAL SOLUTIONS, INC., a Delaware corporation By:  

/s/ Joseph M. Crabb

Name:   Joseph M. Crabb Title:   Executive Vice President 1960 WELL SERVICES,
LLC BADLANDS LEASING, LLC BADLANDS POWER FUELS, LLC, a Delaware limited
liability company BADLANDS POWER FUELS, LLC, a North Dakota limited liability
company HECKMANN WATER RESOURCES CORPORATION HECKMANN WATER RESOURCES (CVR),
INC. HECKMANN WOODS CROSS, LLC HEK WATER SOLUTIONS, LLC IDEAL OILFIELD DISPOSAL,
LLC LANDTECH ENTERPRISES, L.L.C. NES WATER SOLUTIONS, LLC NUVERRA TOTAL
SOLUTIONS, LLC By:  

/s/ Joseph M. Crabb

Name:   Joseph M. Crabb Title:   Vice President APPALACHIAN WATER SERVICES, LLC
By:   HEK Water Solutions, LLC, its managing member   By:  

/s/ Joseph M. Crabb

  Name:   Joseph M. Crabb   Title:   Vice President