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Exhibit 10.4
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT, dated as of May 1, 2006, is entered
into
among Citicorp, USA, Inc., as Administrative Agent for the lenders
and issuers
under the Credit Agreement referred to below (in such capacity, the
"Credit
Agreement Administrative Agent"), and The Bank of New York Trust
Company, N.A.,
as trustee under the Collateral Trust Agreement referred to below
(in such
capacity, the "Collateral Trustee").
WITNESSETH:
WHEREAS, WCI Steel, Inc., a Delaware corporation (formerly known
as
WCI Steel Acquisition, Inc.) (the "Company"), certain of its
subsidiaries, the
lenders and issuers party thereto from time to time and the Credit
Agreement
Administrative Agent are entering into a Credit Agreement, dated as
of May 1,
2006 (as such agreement may be amended, restated, supplemented,
renewed or
otherwise modified from time to time, together with any other
agreements
pursuant to which any of the Indebtedness, commitments,
obligations, costs,
expenses, fees, reimbursements, indemnities or other obligations
payable or
owing thereunder may be refinanced, restructured, renewed,
extended, increased,
refunded or replaced, the "Credit Agreement");
WHEREAS, WCI Steel, Inc., in its capacity as Settlor, and the
Collateral Trustee entered into the Collateral Trust Agreement,
dated as of May
1, 2006 (as such agreement may be amended, restated, supplemented,
renewed or
otherwise modified from time to time, the "Collateral Trust
Agreement");
WHEREAS, the Company and the United Steel, Paper and Forestry,
Rubber,
Manufacturing, Energy Allied Industrial and Service Union, AFL-CIO
(formerly
known as the United Steel Workers of America ("USW")) are entering
into the
Collective Bargaining Agreement, dated as of April 30, 2006 (as
such agreement
may be amended, restated, supplemented or otherwise modified from
time to time,
the "CBA"), pursuant to which, among others, the Collateral Trustee
is granted a
conditional second priority lien on certain assets of the Company
subject to the
first priority lien of the Credit Agreement Administrative Agent
under the
Credit Agreement, and the parties hereto wish to enter into this
Agreement to
govern the rights of the parties with respect to such common
collateral; and
WHEREAS, it is a condition to the initial extensions of credit
under
the Credit Agreement that the parties hereto execute and deliver
this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
and
agreements contained herein, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Definitions
(a) Unless otherwise defined herein, terms are used herein as
defined
in the Credit Agreement as in effect on the date hereof. In
addition, as used in
this Agreement, the following terms shall have the following
meanings (such
meanings to be equally applicable to both the singular and plural
forms of the
terms defined):
"Agent" shall mean each of the Senior Agent and the Junior
Agent.
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"Agreement" shall mean this Intercreditor Agreement, as
amended,
restated, supplemented or otherwise modified from time to time in
accordance
with the terms hereof.
"Bankruptcy Code" shall mean title 11, United States Code.
"Bankruptcy Law" shall mean the Bankruptcy Code, or any similar
federal, state or foreign Requirement of Law for the relief of
debtors or any
arrangement, reorganization, insolvency, moratorium, assignment for
the benefit
of creditors, any other marshalling of the assets and liabilities
of the Company
or any other Credit Party or any similar law relating to or
affecting the
enforcement of creditors' rights generally.
"Collateral Documents" shall mean this Agreement, the Senior
Documents, the Junior Documents and all other security agreements,
pledge
agreements, mortgages, guaranties and other documents executed
and/or delivered
by the Credit Parties pursuant to which any Lien or security
interest is created
or granted to secure any Secured Claims.
"Collateral Trust Agreement" shall have the meaning set forth in
the
recitals to this Agreement.
"Collateral Trust Claims" shall mean all Indebtedness, obligations
and
other liabilities (contingent or otherwise) of the Credit Parties
arising under
or with respect to the Junior Documents or any of them.
"Collateral Trustee" shall include, in addition to the
Collateral
Trustee referred to in the recitals hereto, any successors and
assigns thereto
or any acting Collateral Trustee, in each case, as permitted under
the
Collateral Trust Agreement.
"Company" shall have the meaning set forth in the recitals to
this
Agreement.
"Credit Agreement" shall have the meaning set forth in the recitals
to
this Agreement.
"Credit Agreement Administrative Agent" shall include, in addition
to
the Credit Agreement Administrative Agent referred to in the
recitals hereto,
(a) any successors and assigns thereto or any acting Credit
Agreement
Administrative Agent, in each case, as permitted under the Credit
Agreement, and
(b) if there is no acting Credit Agreement Administrative Agent,
the Requisite
Lenders (as defined in the Credit Agreement).
"Credit Agreement Claims" shall mean all Indebtedness, Obligations
and
other liabilities (contingent or otherwise) of the Credit Parties
arising under
or with respect to the Senior Documents or any of them.
"Credit Agreement Collateral" shall have the meaning given such
term
in the Pledge and Security Agreement.
"Credit Parties" shall mean each of the Company and each of its
Subsidiaries party from time to time to a Collateral Document.
"Enforcement Action" shall mean, with respect to the Senior Claims
or
the Junior Claims, the exercise of, or joining with any other
Person to
exercise, any rights and remedies with
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respect to any Credit Agreement Collateral or the commencement or
prosecution of
enforcement of any of the rights and remedies under, as applicable,
the Senior
Documents or the Junior Documents, or applicable Requirement of
Law, including
without limitation the exercise of any rights of set-off or
recoupment, and the
exercise of any rights or remedies of a secured creditor under the
UCC of any
applicable jurisdiction or under Bankruptcy Law.
"Insolvency or Liquidation Proceeding" shall mean, collectively,
(a)
any voluntary or involuntary case or proceeding under the
Bankruptcy Law with
respect to the Company or any other Credit Party, (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 the Company or any other Credit Party or with
respect to any of
their respective assets, (c) any liquidation, dissolution,
reorganization or
winding up of the Company or any Credit Party, whether voluntary or
involuntary
and whether or not involving insolvency or bankruptcy, (except as
permitted by
Section 8.7 (Restrictions on Fundamental Changes) of the Credit
Agreement), and
(d) any assignment for the benefit of creditors or any other
marshaling of
assets and liabilities of the Company or any other Credit
Party.
"Junior Agent" shall mean the Collateral Trustee.
"Junior Claims" shall mean with respect to any Credit Agreement
Collateral, all Collateral Trust Claims.
"Junior Documents" shall mean the Collateral Trust Agreement, the
CBA,
each Open-End Mortgage, Assignment of Rents, Security Agreement and
Fixture
Filing between the Company or any of its Subsidiarieas and the
Collateral
Trustee and each other agreement, document or certificate executed
by the
Company or any of its Subsidiaires and delivered to the Collateral
Agent or USW
in connection with or pursuant to any of the foregoing.
"Junior
Liens" shall mean all Liens on the Credit Agreement Collateral
securing the Collateral Trust Claims.
"Junior Secured Parties" shall mean the Persons holding the
Collateral
Trust Claims.
"pay in full," "paid in full" or "payment in full" shall mean
with
respect to any Secured Claims, the payment in full in cash of the
principal of,
accrued (but unpaid) interest and premium, if any, on all such
Secured Claims
and, with respect to letters of credit outstanding thereunder,
delivery of cash
collateral or backstop letters of credit in respect thereof in
compliance with
the relevant Collateral Documents, in each case, after or
concurrently with
termination of all Commitments thereunder and payment in full in
cash of any
other such Secured Claims that are due and payable at or prior to
the time such
principal and interest are paid.
"Secured Claims" shall mean, collectively, the Credit Agreement
Claims
and the Collateral Trust Claims.
"Secured Parties" shall mean, collectively, the Senior Secured
Parties
and the Junior Secured Parties.
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"Senior Agent" shall mean the Credit Agreement Administrative
Agent
prior to the payment in full of the Credit Agreement Claims, and
the Collateral
Trustee thereafter.
"Senior Claims" shall mean with respect to any Credit Agreement
Collateral, all Credit Agreement Claims. "Senior Claims" shall
include (i) all
interest accrued or accruing (or which would, absent the
commencement of an
Insolvency or Liquidation Proceeding, accrue) after the
commencement of an
Insolvency or Liquidation Proceeding in accordance with and at the
rate
specified in the Senior Documents whether or not the claim for such
interest is
allowed as a claim in such Insolvency or Liquidation Proceeding,
(ii) all Cash
Management Obligations, (ii) all Hedging Contract Obligations and
(iv) all
indemnification Obligations. To the extent any payment with respect
to the
Senior Claims (whether by or on behalf of any Credit Party, as
proceeds of
security, enforcement of any right of setoff or otherwise) is
declared to be
fraudulent or preferential in any respect, set aside or required to
be paid to a
debtor in possession, trustee, receiver or similar Person, then the
obligation
or part thereof originally intended to be satisfied shall be deemed
to be
reinstated and outstanding as if such payment had not occurred.
"Senior Documents" shall mean Credit Agreement and any other
Loan
Documents (as defined in the Credit Agreement).
"Senior Liens" shall mean all Liens on the Credit Agreement
Collateral
securing the Credit Agreement Claims.
"Senior Secured Parties" shall mean the Persons holding the
Credit
Agreement Claims.
"Uniform
Commercial Code" or "UCC" shall mean the Uniform Commercial
Code of the applicable jurisdiction, as amended.
1.2 Certain Other Terms
(a) The terms "herein," "hereof," "hereto" and "hereunder" and
similar
terms refer to this Agreement as a whole and not to any particular
Article,
Section, subsection or clause in this Agreement.
(b) References herein to an Annex, Schedule, Article, Section,
subsection or clause, unless specifically stated otherwise, refer
to the
appropriate Annex or Schedule to, or Article, Section, subsection
or clause in
this Agreement.
(c) Where the context requires, provisions relating to any
Credit
Agreement Collateral, when used in relation to any Credit Party,
shall refer to
such Credit Party's Credit Agreement Collateral or any relevant
part thereof.
(d) Any reference in this Agreement to any Collateral Document
shall
include all appendices, exhibits and schedules thereto, and, unless
specifically
stated otherwise, all amendments, restatements, supplements or
other
modifications thereto, and as the same may be in effect at any time
such
reference becomes operative.
(e) The term "including" shall mean "including, without
limitation"
except when used in the computation of time periods.
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(f) References in this Agreement to any statute shall be to
such
statute as amended or modified and in effect from time to time.
SECTION 2. PRIORITY OF LIENS
2.1 Lien Subordination. Notwithstanding the date, manner or order
of
grant, attachment or perfection of any Junior Lien or of any Senior
Lien and
notwithstanding any provision of the UCC, any applicable
Requirement of Law, any
Collateral Document, any alleged or actual defect or deficiency in
any of the
foregoing or any other circumstance whatsoever, the Junior Agent,
on behalf of
each Junior Secured Party, agrees that:
(a) any Senior Lien, regardless of how acquired, whether by
grant,
statute, operation of law, subrogation or otherwise, shall be and
shall remain
senior and prior to any Junior Lien (whether or not such Senior
Lien is
subordinated to any Lien securing any other obligation); and
(b) any Junior Lien, regardless of how acquired, whether by
grant,
statute, operation of law, subrogation or otherwise, shall be
junior and
subordinate in all respects to any Senior Lien.
2.2 Prohibition on Contesting Liens. The Junior Agent, on behalf
of
each Junior Secured Party, agrees that it shall not, and hereby
waives any
right, prior to the payment in full of the Credit Agreement Claims,
to:
(a) raise any objection or otherwise contest, or support any
other
Person in raising any objection or contesting, in any proceeding
(including any
Enforcement Action or Insolvency or Liquidation Proceeding or in
any related
action or proceeding), the priority, validity or enforceability of
any Senior
Lien (including the priority set forth herein with respect to any
Junior Lien);
or
(b) demand, request, plead or otherwise assert or claim the benefit
of
any marshalling, appraisal, valuation or other right which it may
have under
applicable Requirements of Law in respect of the Credit Agreement
Collateral or
the Senior Liens, except to the extent that such rights are
expressly granted in
this Agreement.
2.3 New Liens.
(a) The Junior Agent agrees that, prior to the payment in full of
the
Credit Agreement Claims, if the Junior Agent shall acquire any Lien
on any
Credit Agreement Collateral that is not subject to a first-priority
Lien of the
Senior Agent, the Junior Agent shall, upon demand by the Senior
Agent,
notwithstanding anything to the contrary in any other Junior
Documents, assign
such Lien to the Senior Agent as security for the Credit Agreement
Claims (in
which case the Junior Agent may retain a junior lien on such Credit
Agreement
Collateral subject to the terms hereof), and, at all times prior to
such
assignment, the Junior Agent shall be acting as a sub-agent of the
Senior Agent
for the sole purpose of perfecting the Lien on such asset.
(b) Each Credit Party hereby agrees not to grant, or to permit any
of
its Subsidiaries to grant any Lien on any Credit Agreement
Collateral securing
the Senior Claims or the Junior Claims, as the case may be, unless
such Credit
Party or, as the case may be, such Subsidiary, has granted,
through
documentation in form and substance satisfactory to the Senior
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Agent, a Senior Lien on such asset in favor of the Senior Agent for
the benefit
of the Senior Secured Parties as security for the Senior
Claims.
2.4 Separate Liens. Each of the parties hereto acknowledges and
agrees
that (i) the grants of Liens pursuant to the Collateral Documents
constitute
separate and distinct grants of Liens and (ii) because of, among
other things,
their differing rights in the Credit Agreement Collateral, the
Junior Claims are
fundamentally different from the Senior Claims in respect of such
Credit
Agreement Collateral, and the Junior Claims and Senior Claims must
be separately
classified in any Insolvency Proceeding. To further effectuate the
intent of the
parties as provided in the immediately preceding sentence, if it is
held that
the Junior Claims and the Senior Claims in respect of such Credit
Agreement
Collateral constitute only one secured claim (rather than separate
classes of
senior and junior secured claims), then the Junior Secured Parties
hereby
acknowledge and agree that all distributions shall be made as if
there were
separate classes of senior and junior secured claims against the
Credit Parties
(with the effect that, to the extent that the aggregate value of
the Credit
Agreement Collateral is sufficient (for this purpose ignoring all
claims held by
the Junior Secured Parties), the Senior Secured Parties shall be
entitled to
receive, in addition to amounts distributed to them in respect of
principal,
pre-petition interest and other claims, all amounts owing in
respect of
post-petition interest before any distribution is made in respect
of the claims
held by the Junior Secured Parties with respect to the Credit
Agreement
Collateral, with the Junior Secured Parties hereby acknowledging
and agreeing to
turn over to the Senior Secured Parties amounts otherwise received
or receivable
by them to the extent necessary to effectuate the intent of this
sentence, even
if such turnover has the effect of reducing the claim or recovery
of the Junior
Secured Parties).
SECTION 3. EXERCISE OF REMEDIES
3.1 Remedies.
(a) Prior to the payment in full of the Senior Claims, whether or
not
any Insolvency or Liquidation Proceeding has been commenced by or
against any
Credit Party:
(i) no Junior Secured Party shall (or shall direct the Junior
Agent to) (A) exercise or seek to exercise any rights or remedies
with
respect to the Credit Agreement Collateral, (B) institute any
action
or proceeding with respect to such rights or remedies, including
any
action of foreclosure, contest, protest with respect to the
Credit
Agreement Collateral, (C) object to any foreclosure proceeding
or
action brought by the Senior Agent or any Senior Secured Party or
any
other exercise of any rights and remedies relating to the
Credit
Agreement Collateral under the Senior Documents or otherwise, or
(D)
object to the forbearance by the Senior Secured Parties from
bringing
or pursuing any foreclosure proceeding or action or any other
exercise
of any rights or remedies relating to the Credit Agreement
Collateral;
and
(ii) the Senior Agent, on behalf of the Senior Secured Parties,
shall have the exclusive right to enforce rights, exercise
remedies
and make determinations regarding release, disposition
(including
under Section 363(f) of the Bankruptcy Code) or restrictions
with
respect to the Credit Agreement Collateral without any
consultation
with, or the consent of, any Junior Secured Party.
(b) In exercising rights and remedies with respect to any
Credit
Agreement Collateral, the Senior Agent, on behalf of the Senior
Secured Parties,
in respect of such Credit
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Agreement Collateral may enforce the provisions of the Senior
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, without limitation, the rights of an
agent appointed
by them to sell or otherwise dispose of such Credit Agreement
Collateral upon
foreclosure, to incur expenses in connection with such sale or
disposition, and
to exercise all the rights and remedies of a secured lender under
the UCC of any
applicable jurisdiction and of a secured creditor under any
Bankruptcy Law.
(c) The Junior Agent, on behalf of each Junior Secured Party,
agrees
that, prior to the payment in full of the Senior Claims, it will
not take or
receive any such Credit Agreement Collateral or any proceeds of the
Credit
Agreement Collateral in connection with the exercise of any right
or remedy
(including setoff) with respect to such Credit Agreement
Collateral. Without
limiting the generality of the foregoing, prior to the payment in
full of the
Senior Claims, the sole right of the Junior Agent and the Junior
Secured Parties
with respect to such Credit Agreement Collateral shall be the right
to receive a
share of the proceeds thereof pursuant to Section 4.1 (Proceeds of
Collateral).
(d) The Junior Agent, on behalf of each Junior Secured Party
(i)
agrees that neither it nor any Junior Secured Party will take any
action that
would hinder any exercise of remedies undertaken by any Senior
Secured Party
under the Collateral Documents, including any sale, lease,
exchange, transfer or
other disposition of such Credit Agreement Collateral, whether by
foreclosure or
otherwise, and (ii) hereby waives any and all rights it or any
Junior Secured
Party may have as a junior creditor or otherwise to object to the
manner in
which any Senior Secured Party may seek to enforce or collect the
Senior Claims
or the Liens granted in any of such Collateral.
3.2 Exercise of Remedies as Unsecured Creditors.
Notwithstanding
anything to the contrary in this Agreement, each Junior Secured
Party may
exercise its rights and remedies as an unsecured creditor, and with
respect to
Collateral which the Credit Agreement Administrative Agent has a
junior priority
Lien in accordance with the Pledge and Security Agreement and the
Mortgages, as
secured creditor, against the Credit Parties in accordance with the
terms of the
Junior Documents and applicable Requirement of Law. In the event
any Junior
Secured Party becomes a judgment lien creditor in respect of any
Credit
Agreement Collateral as a result of its enforcement of its rights
as an
unsecured creditor, such judgment lien shall be subordinated to any
Lien on such
Credit Agreement Collateral securing any Senior Claim on the same
basis and to
the same extent as the other Liens on such Credit Agreement
Collateral secu
