INTERCREDITOR AGREEMENT

Exhibit 10.6

INTERCREDITOR AGREEMENT

This INTERCREDITOR AGREEMENT (this “Agreement”), is dated as of August 25, 2005, and entered into by and among CitiSteel USA, Inc. (the “Company”), H.I.G. Steelco Holdings, Inc. (“Holdings”), the subsidiaries of the Company listed on the signature pages hereof (the “Company Subsidiaries”), U.S. Bank National Association, in its capacity as agent, including its successors and assigns from time to time (the “Revolving Credit Agent”) under the Revolving Credit Agreement, and The Bank of New York, in its capacity as trustee under the Indenture, including its successors and assigns from time to time (in such capacity, the “Trustee”) and as collateral agent under the Indenture, including its successors and assigns from time to time (in such capacity, the “Collateral Agent”) under the Indenture. Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 below.

RECITALS

The Company, the Revolving Credit Lenders, and the Revolving Credit Agent have entered into that certain Financing Agreement, dated as of August 25, 2005, providing for a revolving credit facility (as amended, restated, supplemented or otherwise modified, from time to time, the “Initial Revolving Credit Agreement”) in favor of the Company;

The Company has issued, or will issue, senior secured floating rate notes due 2010 (the “Initial Notes”) under an indenture dated as of August 25, 2005 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”) among the Company, each Guarantor (as defined in the Indenture), the Trustee and the Collateral Agent;

In order to induce the Revolving Credit Agent and the Revolving Credit Lenders to consent to the Grantors incurring the Note Obligations and granting the Liens to the Collateral Agent and in order to induce the Trustee, the Collateral Agent and the Noteholders to consent to the Grantors incurring the Revolving Credit Obligations and granting the Liens to Revolving Credit Agent, the Revolving Credit Agent, on behalf of the Revolving Credit Lenders, and the Trustee and the Collateral Agent, on behalf of the Noteholders, have agreed to the relative priority of their respective Liens on the Collateral and certain other rights, priorities and interests as set forth in this Agreement.

AGREEMENT

In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

I. DEFINITIONS.

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

“Access Period” means for each parcel of Mortgaged Premises, the period, after the commencement of an Enforcement Period, which begins on the day that the Revolving Credit Agent provides the Collateral Agent with the notice of its election to request access pursuant to Section 3.3(b) below and ends on the earliest of (i) the 120^th day after the Revolving Credit Agent obtains the ability to take physical possession of, remove, or otherwise control physical access to, or actually uses, the Collateral located on such Mortgaged Premises following Enforcement plus such number of days, if any, after the Revolving Credit Agent obtains such access to such Collateral that it is stayed or otherwise prohibited by law or court order from exercising remedies with respect to Collateral located on such Mortgaged Premises, (ii) the date on which all or substantially all of the Revolving Credit Primary Collateral located on such Mortgaged Premises is sold, collected or liquidated, (iii) the date on which the Discharge of Revolving Credit Obligations occurs, or (iv) the date on which the Revolving Credit Default or the Note Default that was the subject of the Enforcement Notice relating to such Enforcement Period has been cured to the satisfaction of the Revolving Credit Agent or the Collateral Agent, as applicable, or waived in writing.

“Accounts” means all now present and future “accounts” and “payment intangibles” (in each case, as defined in Article 9 of the UCC).

“Account Agreements” means any lockbox account agreement, pledged account agreement, blocked account agreement, securities account control agreement, or any similar deposit or securities account agreements among the Collateral Agent and/or the Revolving Credit Agent, one or more Grantors and the relevant financial institution depository or securities intermediary.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, a Person shall be deemed to “control” or be “controlled by” a Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management or policies of such Person whether through ownership of equity interests, by contract or otherwise.

“Agents” means the Revolving Credit Agent and the Collateral Agent.

“Agreement” means this Intercreditor Agreement, as amended, restated, renewed, extended, supplemented or otherwise modified from time to time.

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

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

 

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“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City or Cincinnati, Ohio are authorized or required by law to close.

“Chattel Paper” means all present and future “chattel paper” (as defined in Article 9 of the UCC).

“Collateral” means any and all of the assets and property of any Grantor, whether real, personal or mixed, constituting either Revolving Credit Primary Collateral or Note Primary Collateral.

“Collateral Agent” has the meaning assigned to that term in the Preamble of this Agreement.

“Commodities Agreement” means any present or future futures contract, option contract or similar agreement or arrangement, each of which is for the purpose of hedging the commodity risk associated with one or more Grantor’s operations.

“Company” has the meaning assigned to that term in the Preamble to this Agreement.

“Company Subsidiary” has the meaning assigned to that term in the Preamble to this Agreement.

“Copyright Licenses” means any and all present and future agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder).

“Copyrights” means all present and future United States and foreign copyrights (including Community designs), including but not limited to copyrights in software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and, with respect to any and all of the foregoing: (i) all registrations and applications therefore, (ii) all rights corresponding thereto throughout the world, and (iii) all rights to sue for past, present and future infringements thereof.

“Currency Agreement” means any present or future foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with one or more Grantor’s operations.

“Deposit Accounts” means all present and future “deposit accounts” (as defined in Article 9 of the UCC).

“DIP Financing” has the meaning assigned to that term in Section 6.1.

 

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“Discharge of Note Obligations” means, except to the extent otherwise expressly provided in Section 5.5:

(a) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding), on all Indebtedness outstanding under the Note Documents and constituting Note Obligations (other than contingent obligations or indemnification obligations, in each case for which no claim has been asserted); and

(b) payment in full in cash of all other Note Obligations (other than contingent obligations or indemnification obligations, in each case for which no claim has been asserted) that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid.

“Discharge of Revolving Credit Obligations” means, except to the extent otherwise expressly provided in Section 5.5:

(a) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding), on all Indebtedness outstanding under the Revolving Credit Loan Documents and constituting Revolving Credit Obligations (other than contingent obligations or indemnification obligations, in each case for which no claim has been asserted);

(b) payment in full in cash of all other Revolving Credit Obligations (other than contingent obligations or indemnification obligations, in each case for which no claim has been asserted) that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid;

(c) termination or expiration of all commitments, if any, to extend credit that would constitute Revolving Credit Obligations; and

(d) termination or cash collateralization (in an amount and manner reasonably satisfactory to the Revolving Credit Agent, but in no event greater than 105% of the aggregate undrawn face amount) of all letters of credit issued under the Revolving Credit Loan Documents and constituting Revolving Credit Obligations.

“Disposition” has the meaning assigned to that term in Section 5.1(b).

“Enforcement” means, collectively or individually for one or both of the Revolving Credit Agent and the Collateral Agent, when a Revolving Credit Default or Note Default, as the case may be, has occurred and is continuing, to enforce or attempt to enforce any right to repossess, replevy, attach, garnish, levy upon, collect the proceeds of, foreclose

 

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or realize its Lien upon, sell, liquidate or otherwise dispose of, or otherwise restrict or interfere with the use of, or exercise any remedies with respect to, any material amount of Collateral whether by judicial enforcement of any of the rights and remedies under the Revolving Credit Loan Documents, the Note Documents or under any applicable law, by self-help repossession, by set-off, by notification to account obligors of any Grantor, or otherwise but in all cases excluding (i) the establishment of borrowing base reserves or collateral ineligibles, (ii) the changing of advance rates or advance sublimits, (iii) the imposition of a default rate or late fee, and (iv) the collection and application of Accounts or other monies deposited from time to time in Deposit Accounts or Securities Accounts against the Revolving Credit Obligations pursuant to the Revolving Credit Loan Documents; provided, however, the foregoing exclusion set forth in clause (ii) shall immediately cease to apply upon the earliest of (x) the Revolving Credit Agent’s delivery of written notice to the Company that such exclusion no longer applies, (y) the lapse of ten (10) consecutive Business Days in which no “Revolving Loans” are made and no “Letters of Credit” are issued (in each case, as defined in the Revolving Credit Agreement) during such time period a Revolving Credit Default has occurred and is continuing, and (z) the termination of the Revolving Credit Commitments pursuant to the Revolving Credit Agreement.

“Enforcement Notice” means a written notice delivered, at a time when a Revolving Credit Default or Note Default has occurred and is continuing, by either Revolving Credit Agent or the Collateral Agent to the other announcing that an Enforcement Period has commenced, specifying the relevant event of default, stating the current balance of the Revolving Credit Obligations or the Note Obligations, as the case may be, and requesting the current balance of the Revolving Credit Obligations or Note Obligations, as the case may be, owing to the noticed party.

“Enforcement Period” means the period of time following the receipt by either the Revolving Credit Agent or the Collateral Agent of an Enforcement Notice from the other until the earliest of (i) in the case of an Enforcement Period commenced by the Collateral Agent, the Discharge of Note Obligations, (ii) in the case of an Enforcement Period commenced by Revolving Credit Agent, the Discharge of Revolving Credit Obligations, (iii) the Revolving Credit Agent or the Collateral Agent (as applicable) agree in writing to terminate the Enforcement Period, or (iv) the date on which the Revolving Credit Default or the Note Default that was the subject of the Enforcement Notice relating to such Enforcement Period has been cured to the satisfaction of the Revolving Credit Agent or the Collateral Agent, as applicable, or waived in writing.

“Equipment” means: (i) all “equipment” (as defined in Article 9 of the UCC), (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, “fixtures” (as defined in the UCC) and tools (in each case, regardless of whether characterized as equipment under the UCC) and (iii) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefore, wherever located, now or hereafter existing, including any fixtures.

 

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“General Intangibles” means all present and future “general intangibles” (as defined in Article 9 of the UCC), but excluding “payment intangibles” (as defined in Article 9 of the UCC), Hedge Agreements and Intellectual Property and any rights thereunder.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

“Grantors” means the Company, Holdings, each Company Subsidiary and each other Person that has or may from time to time hereafter execute and deliver a Revolving Credit Security Document or a Note Security Document as a grantor of a security interest (or the equivalent thereof).

“Hedge Agreements” means any Interest Rate Agreement, Commodities Agreement or a Currency Agreement entered into with a Lender Counterparty in order to satisfy the requirements of the Revolving Credit Agreement or otherwise in the ordinary course of one or more Grantor’s businesses.

“Holdings” has the meaning assigned to that term in the Recitals to this Agreement.

“Indebtedness” means and includes all Obligations that constitute “Indebtedness” within the meaning of the Revolving Credit Agreement or the Indenture, as applicable.

“Indenture” has the meaning assigned to that term in the Recitals to this Agreement.

“Initial Notes” has the meaning assigned to that term in the Recitals to this Agreement.

“Initial Revolving Credit Agreement” has the meaning assigned to that term in the Recitals to this Agreement.

“Insolvency or Liquidation Proceeding” means:

(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor;

(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of their respective assets;

 

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(c) any liquidation, dissolution, reorganization or winding up of any Grantor, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or

(d) any general assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

“Instruments” means all present and future “instruments” (as defined in Article 9 of the UCC).

“Intellectual Property” means, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

“Interest Rate Agreement” means any present or future interest rate swap agreement (whether from fixed to floating or from floating to fixed), interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement each of which is for the purpose of hedging the interest rate exposure associated with one or more Grantor’s operations.

“Inventory” means all present and future “inventory” (as defined in Article 9 of the UCC) including, without limitation, all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory; all goods constituting inventory in which any Grantor has an interest in mass or a joint or other interest or right of any kind; and all such goods which are returned to or repossessed by any Grantor, all computer programs embedded in any such goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC).

“Investment Property” means all present and future “investment property” (as defined in Article 9 of the UCC), including, without limitation, all Subsidiary Stock.

“Lender Counterparty” means each Revolving Credit Lender or any Affiliate of a Revolving Credit Lender counterparty to a Hedge Agreement (including any Person who is a Revolving Credit Lender (and any Affiliate thereof) but subsequently, after entering into a Hedge Agreement, ceases to be a Revolving Credit Lender), including, without limitation, each such Affiliate that enters into a joinder agreement with the Revolving Credit Agent.

“Lien” means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust, UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing.

 

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“Maximum Note Debt Amount” is defined in the definition of Note Obligations.

“Maximum Revolving Credit Debt Amount” is defined in the definition of Revolving Credit Obligations.

“Mortgaged Premises” means any real property which shall now or hereafter be subject to a Note Mortgage and/or a Revolving Credit Mortgage.

“New Agent” has the meaning assigned to that term in Section 5.5.

“New Debt Notice” has the meaning assigned to that term in Section 5.5.

“Note Claimholders” means, at any relevant time, the holders of Note Obligations at that time, including the Noteholders, the Trustee and the Collateral Agent under the Note Documents.

“Note Collateral” means any and all of the assets and property of any Grantor, whether real, personal or mixed, with respect to which a Lien is granted as security for any Note Obligations.

“Note Default” means an “Event of Default” as defined in the Indenture.

“Note Documents” means the Indenture, the Notes, the purchase agreements entered thereunder with respect to issuance of the Notes, and the Collateral Agreements (as defined in the Indenture) and each of the other agreements, documents and instruments providing for or evidencing any other Note Obligation, and any other document or instrument executed or delivered at any time in connection with any Note Obligations, including any intercreditor or joinder agreement among holders of Note Obligations to the extent such are effective at the relevant time, as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the provisions of this Agreement.

“Note General Intangibles” means all General Intangibles which are not Revolving Credit General Intangibles.

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

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

 

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“Note Obligations” means all Obligations outstanding under the Notes and the other Note Documents; provided that the principal amount and stated amount of loans and letters of credit under the Notes shall not, at the time incurred, exceed (a) $172,000,000 minus (b) the amount of any mandatory payments of the principal amount of the Note Obligations, including as a result of any mandatory redemptions, repurchases, defeasance or reacquisitions of the Note Obligations, exclusive of interest, fees, reasonable expenses, Protective Advances, and indemnity obligations (the “Maximum Note Debt Amount”). “Note Obligations” shall include all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding, accrue) after commencement of an Insolvency or Liquidation Proceeding in accordance with the rate specified in the relevant Note Document, whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding.

“Note Primary Collateral” means all now owned or hereafter acquired Collateral other than the Revolving Credit Primary Collateral, including, without limitation all: (a) Equipment; (b) Real Estate Assets; (c) Intellectual Property; (d) Note General Intangibles; (e) Investment Property other than Investment Property constituting Revolving Credit Primary Collateral pursuant to clause (d) of the definition of Revolving Credit Primary Collateral; (f) documents of title related to Equipment; (g) all letter-of-credit rights arising out of or related to any of the property or interests in property described in this definition; (h) letters of credit transferred to the Collateral Agent or any Noteholder, or with respect to which the proceeds thereof have been assigned to the Collateral Agent or any Noteholder, or on which the Collateral Agent or any Noteholder is named as beneficiary, in each case arising out of or related to the property or interests in property described in this definition; (i) Records, “supporting obligations” (as defined in Article 9 of the UCC), commercial tort claims or other claims and causes of action, in each case, to the extent related primarily to the foregoing; and (j) substitutions, replacements, accessions, products and proceeds (including, without limitation, insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds of suit) of any or all of the foregoing.

“Note Security Documents” means any agreement, document or instrument pursuant to which a Lien is granted securing any Note Obligations or under which rights or remedies with respect to such Liens are governed.

“Notes” means, collectively, (a) the Initial Notes and (b) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to increase, replace, refinance or refund in whole or in part the Obligations outstanding under the Initial Notes or any other agreement or instrument referred to in this clause, unless such agreement or instrument expressly provides that it is not intended to be and is not a Note, or such agreement or instrument is not a Permitted Refinancing Agreement. Any reference to the Notes hereunder shall be deemed a reference to any Notes then in existence.

 

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“Note Standstill Period” has the meaning set forth in Section 3.1(a)(1).

“Obligations” means all obligations of every nature of each Grantor from time to time owed to any agent or trustee, the Revolving Credit Claimholders, the Note Claimholders or any of them or their respective Affiliates, in each case under the Revolving Credit Loan Documents, the Note Documents or Hedge Agreements, whether for principal, interest or payments for early termination of Interest Rate Agreements, fees, expenses, indemnification or otherwise and all guarantees of any of the foregoing, including, without limitation, the “Obligations”, as defined in the Revolving Credit Agreement, and the “Indebtedness”, as defined in the Indenture, under the Notes.

“Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, but not limited to: (i) each patent and patent application referred to from time to time on schedules to Revolving Credit Security Documents or Note Security Documents, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, and (v) all rights to sue for past, present and future infringements thereof.

“Patent Licenses” means all present and future agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder).

“Permitted Refinancing” means any Refinancing the governing documentation of which constitutes Permitted Refinancing Agreements.

“Permitted Refinancing Agreements” means, with respect to either the Revolving Credit Agreement or the Notes, as the case may be, any credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to increase, replace, refinance or refund in whole or in part the Obligations outstanding under the Revolving Credit Agreement or the Notes, as such financing documentation may be amended, restated, supplemented or otherwise modified from time to time in compliance with this Agreement, but specifically excluding any such financing documentation to the extent that it contains, either initially or by amendment or other modification, any material terms, conditions, covenants or defaults not permitted by Sections 5.3(a), (c) and (d).

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Pledged Collateral” has the meaning set forth in Section 5.4(a).

 

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“Protective Advances” means amounts expended by the Revolving Credit Claimholders or the Note Claimholders to protect or enforce rights in the Collateral.

“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by the Company or any Grantor in any real property.

“Records” means all present and future “records” (as defined in Article 9 of the UCC).

“Recovery” has the meaning set forth in Section 6.4.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for, such Indebtedness, in any case in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Required Revolving Lenders” means the “Required Lenders” (as defined in the Revolving Credit Agreement).

“Revolving Credit Agent” has the meaning assigned to that term in the Recitals to this Agreement.

“Revolving Credit Agreement” means collectively, (a) the Initial Revolving Credit Agreement and (b) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to increase, replace, refinance or refund in whole or in part the Obligations outstanding under the Initial Revolving Credit Agreement or any other agreement or instrument referred to in this clause, unless such agreement or instrument expressly provides that it is not intended to be and is not a Revolving Credit Agreement, or such agreement or instrument is not a Permitted Refinancing Agreement. Any reference to the Revolving Credit Agreement hereunder shall be deemed a reference to any Revolving Credit Agreement then in existence.

“Revolving Credit Claimholders” means, at any relevant time, the holders of Revolving Credit Obligations at that time, including the Revolving Credit Lenders and the Revolving Credit Agent under the Revolving Credit Loan Documents.

“Revolving Credit Collateral” means all of the assets and property of any Grantor, whether real, personal or mixed, with respect to which a Lien is granted as security for any Revolving Credit Obligations.

“Revolving Credit Commitments” means the “Commitments” (as defined in the Revolving Credit Agreement).

 

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“Revolving Credit Default” means an “Event of Default” (as defined in the Revolving Credit Agreement).

“Revolving Credit General Intangibles” means all General Intangibles (other than Intellectual Property) pertaining to the other items of property included within clauses (a), (b), (c), (d), (f) and (g) of the definition of Revolving Credit Primary Collateral, including, without limitation, all contingent rights with respect to warranties on Inventory or Accounts which are not yet “payment intangibles” (as defined in Article 9 of the UCC).

“Revolving Credit Lenders” means the “Lenders” under and as defined in the Revolving Credit Loan Documents.

“Revolving Credit Loan Documents” means the Revolving Credit Agreement and the Loan Documents (as defined in the Revolving Credit Agreement), including Hedge Agreements entered into with a Lender Counterparty, and each of the other agreements, documents and instruments providing for or evidencing any other Revolving Credit Obligation, and any other document or instrument executed or delivered at any time in connection with any Revolving Credit Obligations, including any intercreditor or joinder agreement among holders of Revolving Credit Obligations, to the extent such are effective at the relevant time, as each may be amended, restated, supplemented, modified, renewed, extended or Refinanced from time to time in accordance with the provisions of this Agreement.

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

“Revolving Credit Obligations” means all Obligations outstanding under the Revolving Credit Agreement and the other Revolving Credit Loan Documents, including Hedge Agreements entered into with any Lender Counterparty; provided that the principal amount and stated amount of loans and letters of credit under the Revolving Credit Agreement shall not, at the time incurred, exceed (a) $20,000,000 minus (b) the amount of any mandatory permanent reductions in the Revolving Commitments exclusive of interest, fees, reasonable expenses, Protective Advances, indemnity obligations and obligations under Hedge Agreements (the “Maximum Revolving Credit Debt Amount”). “Revolving Credit Obligations” shall include all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding, accrue) after commencement of an Insolvency or Liquidation Proceeding in accordance with the rate specified in the relevant Revolving Credit Loan Document whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding.

“Revolving Credit Primary Collateral” means all now owned or hereafter acquired Revolving Credit Collateral which constitutes: (a) Accounts, other than “payment

 

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intangibles” (as defined in Article 9 of the UCC) which constitute identifiable proceeds of Note Primary Collateral; (b) all Inventory or documents of title for any Inventory; (c) Hedge Agreements; (d) Deposit Accounts, Investment Property constituting (i) proceeds of Revolving Credit Primary Collateral, (ii) Securities Accounts (including all cash, marketable securities and other funds held in or on deposit in either of the foregoing) and (iii) the stock of the Company, Instruments and Chattel Paper; provided, however, that to the extent that Instruments or Chattel Paper constitute identifiable proceeds of Note Primary Collateral or other identifiable proceeds of Note Primary Collateral are deposited or held in any such Deposit Accounts or Securities Accounts after an Enforcement Notice, then (as provided in Section 3.5 below) such Instruments, Chattel Paper or other identifiable proceeds shall be treated as Note Primary Collateral; (e) Revolving Credit General Intangibles; (f) all letter-of-credit rights arising out of or related to any of the property or interests in property described in this definition or which are otherwise included in the Borrowing Base (as defined in the Revolving Credit Agreement); (g) letters of credit transferred to the Revolving Credit Agent or any Revolving Credit Lender, or with respect to which the proceeds thereof have been assigned to the Revolving Credit Agent or any Revolving Credit Lender, or on which the Revolving Credit Agent or any Revolving Credit Lender is named as beneficiary, in each case arising out of or related to the property or interests in property described in this definition or which are otherwise included in the Borrowing Base (as defined in the Revolving Credit Agreement); (h) credit insurance with respect to any Accounts; (i) Records, “supporting obligations” (as defined in Article 9 of the UCC), commercial tort claims or other claims and causes of action, in each case, to the extent related primarily to any of the foregoing; and (j) substitutions, replacements, accessions, products and proceeds (including, without limitation, insurance proceeds, licenses, royalties, income, payments, claims, damages and proceeds of suit) of any or all of the foregoing.

“Revolving Credit Security Documents” means any agreement, document or instrument pursuant to which a Lien is granted securing any Revolving Credit Obligations or under which rights or remedies with respect to such Liens are governed.

“Secured Parties” means the Revolving Credit Claimholders and the Note Claimholders.

“Securities Accounts” means all present and future “securities accounts” (as defined in Article 8 of the UCC), including all monies, “uncertificated securities,” and “securities entitlements” (as defined in Article 8 of the UCC) contained therein.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

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“Subsidiary Stock” means all present and future equity securities of Subsidiaries of the Company and Holdings which are Subsidiaries.

“Trademark Licenses” means any and all present and future agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder).

“Trademarks” means all present and future United States, and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, but not limited to: (i) all extensions or renewals of any of the foregoing, (ii) all of the goodwill of the business connected with the use of and symbolized by the foregoing, and (iii) the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill.

“Trade Secret Licenses” means any and all present and future agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder).

“Trade Secrets” means all present and future trade secrets and other confidential or proprietary information and know-how, regardless of whether such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, including but not limited to the right to sue for past, present and future misappropriation or other violation of any Trade Secret.

“Trustee” has the meaning assigned to that term in the Recitals to this Agreement.

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

“Use Period” means, with respect to: (a) the Note Primary Collateral (exclusive of the Note Primary Collateral located on each applicable parcel of the Mortgaged Premises for which an Access Period has commenced under Section 3.3), the period, after the commencement of an Enforcement Period by the Revolving Credit Agent, which begins on the day that the Revolving Credit Agent provides the Collateral Agent with an Enforcement Notice and ends on the earliest of (i) the 120^th day after the Revolving Credit Agent obtains the ability to take physical possession of, remove, or otherwise control physical access to, or actually uses, such Note Primary Collateral following Enforcement

 

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plus such number of days, if any, after the Revolving Credit Agent obtains physical access to such Note Primary Collateral that it is stayed or otherwise prohibited by law or court order from exercising remedies with respect to such Note Primary Collateral, (ii) the date on which all or substantially all of the Revolving Credit Primary Collateral is sold, collected or liquidated, (iii) the date on which the Discharge of Revolving Credit Obligations occurs, or (iv) the date on which the Revolving Credit Default that was the subject of the Enforcement Notice relating to such Enforcement Period has been cured to the satisfaction of the Revolving Credit Agent or waived in writing.

1.2 Terms Generally. 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 the word “shall.” Unless the context requires otherwise:

(a) 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, supplemented, modified, renewed or extended;

(b) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns;

(c) 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;

(d) all references herein to Sections shall be construed to refer to Sections of this Agreement;

(e) all uncapitalized terms have the meanings, if any, given to them in the UCC, as now or hereafter enacted in the State of Ohio (unless otherwise specifically defined herein); and

(f) 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.

II. LIEN PRIORITIES.

2.1 Relative Priorities. Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing the Note Obligations granted on the Collateral or of any Liens securing the Revolving Credit Obligations granted on the Collateral and notwithstanding any provision of any UCC, or any other applicable law, or the Revolving Credit Loan Documents or the Note Documents or any defect or deficiencies in, or failure to perfect,

 

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the Liens securing the Revolving Credit Obligations or Note Obligations or any other circumstance whatsoever, the Revolving Credit Agent, on behalf of itself and the Revolving Credit Claimholders and the Collateral Agent, on behalf of itself and the Note Claimholders hereby agree that:

(a) any Lien of the Revolving Credit Agent on the Revolving Credit Primary Collateral securing the Revolving Credit Obligations up to the Maximum Revolving Credit Debt Amount, whether such Lien is now or hereafter held by or on behalf of the Revolving Credit Agent or any Revolving Credit Claimholders 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 on the Revolving Credit Primary Collateral securing any Note Obligations; and

(b) any Lien of the Collateral Agent on the Note Primary Collateral securing the Note Obligations up to the Maximum Note Debt Amount, whether such Lien is now or hereafter held by or on behalf of the Collateral Agent, any Note Claimholders 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 to all Liens on the Note Primary Collateral securing any Revolving Credit Obligations.

2.2 Prohibition on Contesting Liens. Each of the Collateral Agent, for itself and on behalf of each Note Claimholder, and the Revolving Credit Agent, for itself and on behalf of each Revolving Credit Claimholder, agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or on behalf of any of the Revolving Credit Claimholders or any of the Note Claimholders in the Collateral, or the provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of either Agent or any Revolving Credit Claimholder or Note Claimholder to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the Obligations as provided in Sections 2.1, 3.1 and 3.2.

2.3 No New Liens. So long as neither the Discharge of Revolving Credit Obligations nor the Discharge of Note Obligations has occurred, subject to Article VI hereof, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against one or more of the Company or any other Grantor, the parties hereto agree that the Company shall not, and shall not permit any other Grantor to:

(a) grant or permit any additional Liens on any asset or property to secure any Note Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure the Revolving Credit Obligations; or

(b) grant or permit any additional Liens on any asset or property to secure any Revolving Credit Obligations unless it has granted or concurrently grants a Lien on such asset or property to secure the Note Obligations.

 

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To the extent any additional Liens are granted on any asset or property pursuant to this Section 2.3, the priority of such additional Liens shall be determined in accordance with Section 2.1. In addition, to the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available hereunder, the Revolving Credit Agent on behalf of the Revolving Credit Claimholders and the Collateral Agent, on behalf of Note Claimholders, agree that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.

2.4 Similar Liens and Agreements. The parties hereto agree that it is their intention that the Revolving Credit Collateral and the Note Collateral be identical. In furtherance of the foregoing and of Section 8.8, the parties hereto agree, subject to the other provisions of this Agreement:

(a) upon request by the Revolving Credit Agent or the Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Revolving Credit Collateral and the Note Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the Revolving Credit Loan Documents and the Note Documents; and

(b) that the Revolving Credit Security Documents and the Note Security Documents and guarantees for the Revolving Credit Obligations and the Note Obligations, subject to Section 5.3(b), shall be in all material respects the same forms of documents in respect of the extent of the Collateral securing the respective Obligations (but for this Agreement) and the remedies in respect thereof.

III. ENFORCEMENT.

3.1 Exercise of Remedies — Restrictions on the Collateral Agent and the Note Claimholders.

(a) Until the Discharge of Revolving Credit Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, subject to Article VI hereof, the Collateral Agent and the Note Claimholders:

(1) will not exercise or seek to exercise any rights or remedies with respect to any Revolving Credit Primary Collateral (including the exercise of any right of set-off or any right under any Account Agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Collateral Agent or any Note Claimholder is a party) or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure); provided, however, that the Collateral Agent may exercise any or all such rights or remedies after the passage of a period of at least 180 days has elapsed since the later of: (i) the date on which the Collateral Agent declared the existence of a Note Default and demanded the repayment of all the principal amount of any Note Obligations; and (ii) the date on which the Revolving Credit Agent received notice

 

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from the Collateral Agent of such declarations of a Note Default; provided, further, however, that notwithstanding anything herein to the contrary, in no event shall the Collateral Agent or any Note Claimholder exercise any rights or remedies with respect to the Revolving Credit Primary Collateral if, notwithstanding the expiration of the 180 day period, the Revolving Credit Agent or Revolving Credit Claimholders shall have, within such 180 day period, commenced and be diligently pursuing the exercise of their rights or remedies with respect to all or any material portion of such Collateral (prompt notice of such exercise to be given to the Collateral Agent) (the period during which the Collateral Agent and the Note Claimholders may not pursuant to this Section 3.1(a)(1) exercise or seek to exercise any rights or remedies with respect to any Revolving Credit Primary Collateral, the “Note Standstill Period”);

(2) will not contest, protest, object to or hinder any foreclosure proceeding or action brought by the Revolving Credit Agent or any Revolving Credit Claimholder or any other exercise by the Revolving Credit Agent or any Revolving Credit Claimholder of any rights and remedies relating to the Revolving Credit Primary Collateral, including any sale, lease, exchange, transfer or other disposition of the Revolving Credit Primary Collateral, whether under the Revolving Credit Loan Documents or otherwise;

(3) subject to their rights under clause (a)(1) above and except as may be permitted in Section 3.1(c), will not object to the forbearance by the Revolving Credit Agent or the Revolving Credit Claimholders from bringing or pursuing any Enforcement with respect to the Revolving Credit Primary Collateral;

(4) subject to their rights under clause (a)(1) above and except as may be permitted in Section 3.1(c) and 6.3(c)(1), waive any and all rights the Note Claimholders may have as a junior lien creditor or otherwise to object to the manner in which the Revolving Credit Agent or the Revolving Credit Claimholders seek to enforce or collect the Revolving Credit Obligations or the Liens securing the Revolving Credit Obligations granted in any of the Revolving Credit Loan Documents or undertaken in accordance with this Agreement, regardless of whether any action or failure to act by or on behalf of the Revolving Credit Agent or Revolving Credit Claimholders is adverse to the interest of the Note Claimholders; and

(5) subject to their rights under clause (a)(1) above and except as may be permitted in Section 3.1(c) and 6.3(c)(1), acknowledge and agree that no covenant, agreement or restriction contained in the Note Security Documents or any other Note Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of the Revolving Credit Agent or the Revolving Credit Claimholders with respect to the Revolving Credit Primary Collateral as set forth in this Agreement and the Revolving Credit Loan Documents;

provided, however, that, in the case of (1), (2) and (3) above, the Liens granted to secure the Note Obligations of the Note Claimholders shall attach to any proceeds resulting from actions taken by the Revolving Credit Agent or any Revolving Credit Claimholder with respect to the

 

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Revolving Credit Primary Collateral in accordance with this Agreement after application of such proceeds to the extent necessary to meet the requirements of a Discharge of Revolving Credit Obligations.

(b) Until the Discharge of Revolving Credit Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, the Revolving Credit Agent and the Revolving Credit Claimholders shall have the right to enforce rights, exercise remedies (including set-off and the right to credit bid their debt) and, in connection therewith (including voluntary Dispositions of Revolving Credit Primary Collateral by the respective Grantors after a Revolving Credit Default) make determinations regarding the release, disposition, or restrictions with respect to the Revolving Credit Primary Collateral without any consultation with or the consent of the Collateral Agent or any Note Claimholder; provided, however, that the Lien securing the Note Obligations shall remain on the proceeds (other than those properly applied to the Revolving Credit Obligations in accordance with the Revolving Credit Loan Documents) of such Collateral released or disposed of subject to the relative priorities described in Section 2. In exercising rights and remedies with respect to the Revolving Credit Primary Collateral, the Revolving Credit Agent and the Revolving Credit Claimholders may enforce the provisions of the Revolving Credit 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 the Revolving Credit Primary Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under the Bankruptcy Laws of any applicable jurisdiction.

(c) Notwithstanding anything to the contrary contained herein, the Collateral Agent and any Note Claimholder may:

(1) file a claim or statement of interest with respect to the Note Obligations; provided that an Insolvency or Liquidation Proceeding has been commenced by or against any Grantor;

(2) take any action (not adverse to the priority status of the Liens on the Revolving Credit Primary Collateral, or the rights of the Revolving Credit Agent or any of the Revolving Credit Claimholders to exercise remedies in respect thereof) in order to create, perfect, preserve or protect (but, prior to the expiration of the Note Standstill Period, not enforce) its Lien on any of the Revolving Credit Primary Collateral;

(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 Note Claimholders, including any claims secured by the Revolving Credit Primary Collateral, if any, in each case in accordance with the terms of this Agreement;

 

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(4) file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Grantors arising under either any Insolvency or Liquidation Proceeding or applicable non-bankruptcy law, in each case not inconsistent with the terms of this Agreement;

(5) vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Note Obligations and the Note Primary Collateral; and

(6) exercise any of its rights or remedies with respect to any of the Collateral after the termination of the Note Standstill Period to the extent permitted by Section 3.1(a)(1).

The Collateral Agent, on behalf of itself and the Note Claimholders, agrees that it will not take or receive any Revolving Credit Primary Collateral or any proceeds of such Collateral in connection with the exercise of any right or remedy (including set-off) with respect to any such Collateral in its capacity as a creditor in violation of this Agreement. Without limiting the generality of the foregoing, unless and until the Discharge of Revolving Credit Obligations has occurred, except as expressly provided in Sections 3.1(a), 6.3(c)(1) and this Section 3.1(c), the sole right of the Collateral Agent and the Note Claimholders with respect to the Revolving Credit Primary Collateral is to hold a Lien on such Collateral pursuant to the Note Security Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of Revolving Credit Obligations has occurred.

(d) [Reserved.]

(e) Except as otherwise specifically set forth in Sections 3.1(a) and (d) and 3.5 and Article 6, the Collateral Agent and the Note Claimholders may exercise rights and remedies as unsecured creditors against any Grantor and may exercise rights and remedies with respect to the Note Primary Collateral, in each case, in accordance with the terms of the Note Documents and applicable law; provided, however, that in the event that any Note Claimholder becomes a judgment Lien creditor in respect of Revolving Credit Primary Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Note Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Revolving Credit Obligations) as the other Liens securing the Note Obligations are subject to this Agreement.

(f) Except as provided in Section 5.3(d), nothing in this Agreement shall prohibit the receipt by the Collateral Agent or any Note Claimholders of the required payments of interest, principal and other amounts owed in respect of the Note Obligations so long as such receipt is not the direct or indirect result of the exercise by the Collateral Agent or any Note Claimholders of rights or remedies as a secured creditor (including set-off with respect to Revolving Credit Primary Collateral) or enforcement in contravention of this Agreement of any Lien held by any of them. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the Revolving Credit Agent or the Revolving Credit Claimholders may have against the Grantors under the Revolving Credit Loan Documents.

 

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3.2 Exercise of Remedies — Restrictions on the Revolving Credit Agent and Revolving Credit Claimholders.

(a) Until the Discharge of Note Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, subject to Article VI hereof, the Revolving Credit Agent and the Revolving Credit Claimholders:

(1) will not exercise or seek to exercise any rights or remedies with respect to any Note Primary Collateral (including the exercise of any right of set-off or any right under any Account Agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Revolving Credit Agent or any Revolving Credit Claimholder is a party) or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure); provided, however, that the Revolving Credit Agent may exercise the rights provided for in Section 3.3 (with respect to any Access Period) and Section 3.4 (with respect any Access Period or Use Period);

(2) will not contest, protest, object to or hinder any foreclosure proceeding or action brought by the Collateral Agent or any Note Claimholder or any other exercise by the Collateral Agent or any Note Claimholder of any rights and remedies relating to the Note Primary Collateral, including any sale, lease, exchange, transfer or other disposition of the Note Primary Collateral, whether under the Note Documents or otherwise subject to the Collateral Agent’s and the Note Claimholders’ obligations under Sections 3.3 and 3.4; and

(3) subject to their rights under clause (a)(1) above and except as may be permitted in Section 3.2(c), will not object to the forbearance by the Collateral Agent or the Note Claimholders from bringing or pursuing any Enforcement with respect to the Noteholder Primary Collateral;

(4) Subject to Sections 3.2(a) and (c) and Sections 3.3, 3.4, 3.5, and 6.3(c)(2), waive any and all rights the Revolving Credit Claimholders may have as a junior lien creditor or otherwise to object to the manner in which the Collateral Agent or the Note Claimholders seek to enforce or collect the Note Obligations or the Liens securing the Note Obligations granted in any of the Note Documents or undertaken in accordance with this Agreement, regardless of whether any action or failure to act by or on behalf of the Collateral Agent or Note Claimholders is adverse to the interest of the Revolving Credit Claimholders; and

(5) Subject to Sections 3.2(a) and (c) and Sections 3.3, 3.4, 3.5, and 6.3(c)(2), acknowledge and agree that no covenant, agreement or restriction contained in the Revolving Credit Security Documents or any other Revolving Credit Loan Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of the

 

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