Exhibit 10.2

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT

dated as of December 14, 2012

among

BANK OF AMERICA, N.A.,

as Revolving Collateral Agent,

CREDIT SUISSE AG,

as Term Collateral Agent,

FLAG INTERMEDIATE HOLDINGS CORPORATION,

METALS USA, INC.

and

the Subsidiaries of Metals USA, Inc. named herein

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

  

DEFINITIONS    SECTION 1.01.  

Construction; Certain Defined Terms

     1   

ARTICLE II

  

SUBORDINATION OF JUNIOR LIENS; CERTAIN AGREEMENTS

  

SECTION 2.01.  

Subordination of Junior Liens

     7    SECTION 2.02.  

No Action With Respect to Junior Secured Obligations Collateral Subject to
Senior Liens

     7    SECTION 2.03.  

No Duties of Senior Representative

     7    SECTION 2.04.  

No Interference; Payment Over; Reinstatement

     8    SECTION 2.05.  

Automatic Release of Junior Liens

     9    SECTION 2.06.  

Certain Agreements With Respect to Bankruptcy or Insolvency Proceedings

     10    SECTION 2.07.  

Reinstatement

     10    SECTION 2.08.  

Entry Upon Premises by the Revolving Collateral Agent and the Revolving Lenders

     10    SECTION 2.09.  

Insurance

     12    SECTION 2.10.  

Refinancings

     12    SECTION 2.11.  

Amendments to Security Documents

     13    SECTION 2.12.  

Legends

     13   

ARTICLE III

  

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS;

RIGHTS UNDER PERMITS AND LICENSES

  

  

SECTION 3.01.  

General

     13    SECTION 3.02.  

Lock-Box Accounts

     14    SECTION 3.03.  

Rights under Permits and Licenses

     14   

ARTICLE IV

  

EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS

  

SECTION 4.01.  

Information as to Obligations and Liens

     14   

ARTICLE V

  

CONSENT OF GRANTORS

  

SECTION 5.01.  

Consent of Grantors

     15   

ARTICLE VI

  

REPRESENTATIONS AND WARRANTIES

  

SECTION 6.01.  

Representations and Warranties of Each Party

     15    SECTION 6.02.  

Representations and Warranties of Each Representative

     15   

 

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ARTICLE VII

  

MISCELLANEOUS

  

SECTION 7.01.  

Notices

     15    SECTION 7.02.  

Waivers; Amendment

     16    SECTION 7.03.  

Parties in Interest

     17    SECTION 7.04.  

Survival of Agreement

     17    SECTION 7.05.  

Counterparts

     17    SECTION 7.06.  

Severability

     17    SECTION 7.07.  

Governing Law; Jurisdiction; Consent to Service of Process

     17    SECTION 7.08.  

WAIVER OF JURY TRIAL

     18    SECTION 7.09.  

Headings

     18    SECTION 7.10.  

Conflicts

     18    SECTION 7.11.  

Provisions Solely to Define Relative Rights

     18   

 

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LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of December 14, 2012
among BANK OF AMERICA, N.A., as collateral agent for the Revolving Facility
Secured Parties referred to herein, CREDIT SUISSE AG, as collateral agent for
the Term Facility Secured Parties referred to herein, FLAG INTERMEDIATE HOLDINGS
CORPORATION, METALS USA, INC. and the subsidiaries of Metals USA, Inc. named
herein.

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

ARTICLE I

DEFINITIONS

SECTION 1.01. Construction; Certain Defined Terms. (a) The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument, other document, statute
or regulation herein shall be construed as referring to such agreement,
instrument, other document, statute or regulation as from time to time amended,
supplemented or otherwise modified, (ii) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, but shall
not be deemed to include the subsidiaries of such person unless express
reference is made to such subsidiaries, (iii) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (iv) all
references herein to Articles, Sections and Annexes shall be construed to refer
to Articles, Sections and Annexes of this Agreement, (v) unless otherwise
expressly qualified herein, the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights and (vi) the term “or” is not exclusive.

(b) As used in this Agreement, the following terms have the meanings specified
below:

“Bankruptcy Code” means Title 11 of the United States Code.

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

“Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited), and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

 

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“Collateral” means the Revolving Facility Collateral and the Term Facility
Collateral.

“Company” means Metals USA, Inc., a Delaware corporation, and its successors and
permitted assigns.

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

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

“Holdings” means Flag Intermediate Holdings Corporation, a Delaware corporation.

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

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

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

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

“Junior Secured Obligations Collateral” means the Collateral in respect of which
the Junior Representative (on behalf of itself and the Junior Secured
Obligations Secured Parties) holds a Junior Lien.

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

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

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any other agreement to give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes of any jurisdiction); provided, however, that in no event
shall an operating lease be deemed to constitute a Lien.

 

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“Mortgages” means the Term Facility Mortgages and the Revolving Facility
Mortgages.

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

“Noteholder Liens” means Term Facility Liens.

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

“Other Pari Passu Revolving Indebtedness” means any Indebtedness (other than
Revolving Facility Obligations) of the Company or any of its subsidiaries which
is permitted to be incurred and secured on a first-lien, pari passu basis with
the Revolving Facility Obligations pursuant to Section 9.13(e) of the Revolving
Credit Agreement, and any Permitted Refinancing Indebtedness incurred to
Refinance such Indebtedness (capitalized terms used in this definition and not
defined in this Agreement having the respective meanings set forth in the
Revolving Credit Agreement).

“Other Pari Passu Term Indebtedness” means, any Indebtedness (other than Term
Facility Obligations) of the Company or any of its subsidiaries which is
incurred pursuant to Section 7.01(r) of the Term Credit Agreement, and is
secured on a first-lien, pari passu basis with the Term Credit Obligations
pursuant to Section 7.02(u) of the Term Credit Agreement, and any Permitted
Refinancing Indebtedness incurred to Refinance such Indebtedness (capitalized
terms used in this definition having the respective meanings set forth in the
Term Credit Agreement).

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, joint-stock company, trust, unincorporated
organization, association, corporation, government or any agency or political
subdivision thereof or any other entity.

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

“Revolving Administrative Agent” means Bank of America, N.A., in its capacity as
administrative agent under the Revolving Credit Agreement, and its successors in
such capacity.

“Revolving Collateral Agent” means Bank of America, N.A., in its capacity as
collateral agent under the Revolving Facility Documents, and its successors in
such capacity.

“Revolving Credit Agreement” means the Loan and Security Agreement dated as of
December 17, 2010, as amended as of March 9, 2011 and August 10, 2011, among
Holdings, the borrowers named therein, the Revolving Lenders, the Revolving
Administrative Agent and the Revolving Collateral Agent, as amended, extended,
renewed, restated, supplemented, waived, replaced, restructured, repaid,
refunded, refinanced or otherwise modified from time to time, with the same or
different lenders and agents.

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

 

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“Revolving Facility Concentration Account” means each concentration or similar
account established or maintained pursuant to the Revolving Facility Security
Documents.

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

“Revolving Facility First Lien Collateral” means any and all of the following
Revolving Facility Collateral now owned or at any time hereafter acquired by
Holdings, the Company or any other Grantor: (a) all Accounts; (b) all Inventory;
(c) to the extent evidencing, governing, securing or otherwise related to the
items referred to in the preceding clauses (a) and (b), all (i) General
Intangibles, (ii) Chattel Paper, (iii) Instruments and (iv) Documents; (d) all
Payment Intangibles (including corporate tax refunds), other than any Payment
Intangibles that represent tax refunds in respect of or otherwise relate to real
property, Fixtures or Equipment; (e) all indebtedness of Holdings or any of its
subsidiaries that arises from cash advances made after the date hereof to enable
the obligor or obligors thereon to acquire Inventory; (f) all collection
accounts, deposit accounts and commodity accounts and any cash or other assets
in any such accounts (other than identifiable cash proceeds in respect of real
estate, Fixtures or Equipment); (g) all books and records related to the
foregoing; and (h) all Products and Proceeds of any and all of the foregoing in
whatever form received, including proceeds of insurance policies related to
Inventory of any Grantor and business interruption insurance. All capitalized
terms used in this definition and not defined elsewhere in this Agreement have
the meanings assigned to them in the New York UCC.

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

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

“Revolving Facility Mortgages” means the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents that convey or evidence a Lien in favor of the Revolving Collateral
Agent (on behalf of the Revolving Facility Secured Parties) on real or leasehold
property of a Grantor to secure the Revolving Facility Obligations, as amended,
extended, renewed, restated, supplemented or otherwise modified from time to
time.

“Revolving Facility Obligations” means all “Obligations” as such term is defined
in the Revolving Credit Agreement.

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

“Revolving Facility Security Documents” means the Revolving Credit Agreement
(insofar as the same grants a Lien on Collateral), the Revolving Facility
Mortgages, the Copyright, Patent and Trademark Agreements (as defined in the
Revolving Credit Agreement) and any other documents now existing or entered into
after the date hereof that create Liens on any assets or properties of any
Grantor or any of its subsidiaries to secure any Revolving Facility Obligations.

 

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

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

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

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

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

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

“Senior Secured Obligations Collateral” means the Collateral in respect of which
the Senior Representative (on behalf of itself and the Senior Secured
Obligations Secured Parties) holds a Senior Lien.

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

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

“Subsidiary” means, with respect to any Person, (a) any corporation, association
or other business entity (other than a partnership, joint venture or limited
liability company) of which more than 50% of the total voting power of the
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
of determination owned or controlled, directly or indirectly, by such Person or
one or more of the other subsidiaries of that Person or a combination thereof,
and (b) any partnership, joint venture or limited liability company of which
(x) more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general and limited partnership interests, as applicable,
are owned or controlled, directly or indirectly, by such Person or one or more
of the other subsidiaries of that Person or a combination thereof, whether in
the form of membership, general, special or limited partnership interests or
otherwise, and (y) such Person or any subsidiary of such person is a controlling
general partner or otherwise controls such entity.

“Term Administrative Agent” means Credit Suisse AG, in its capacity as
administrative agent under the Term Credit Agreement, and its successors in such
capacity.

 

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“Term Collateral Agent” means Credit Suisse AG, in its capacity as collateral
agent under the Term Facility Security Documents, and its successors in such
capacity.

“Term Credit Agreement” means the Credit Agreement dated as of December 14, 2012
among Holdings, the Company, the Term Lenders and the Term Administrative Agent,
as amended, extended, renewed, restated, supplemented, waived, replaced,
restructured, repaid, refunded, refinanced or otherwise modified from time to
time, with the same or different lenders and agents.

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

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

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

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

“Term Facility Mortgages” means the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents that convey or evidence a Lien in favor of the Term Collateral Agent
on behalf of the Term Facility Secured Parties) on real or leasehold property of
a Grantor to secure Term Facility Obligations, as amended, supplemented,
restated, renewed, refunded, replaced, restructured, repaid, refinanced or
otherwise modified from time to time.

“Term Facility Obligations” means all “Finance Obligations” as such term is
defined in the Term Facility Security Agreement.

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

“Term Facility Security Agreement” means the Collateral Agreement dated as of
December 14, 2012, among Holdings, the Company, the subsidiaries of the Company
party thereto and the Term Collateral Agent, as amended, supplemented, restated,
renewed, refunded, replaced, restructured, repaid, refinanced or otherwise
modified from time to time.

“Term Facility Security Documents” means the Term Facility Security Agreement,
the Term Facility Mortgages, the Copyright, Patent and Trademark Agreements (as
defined in the Term Facility Security Agreement) and any other documents now
existing or entered into after the date hereof that create Liens on any assets
or properties of any Grantor to secure any Term Facility Obligations.

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

 

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ARTICLE II

SUBORDINATION OF JUNIOR LIENS; CERTAIN AGREEMENTS

SECTION 2.01. Subordination of Junior Liens. (a) All Junior Liens in respect of
any Collateral are expressly subordinated and made junior in right, priority,
operation and effect to any and all Senior Liens in respect of such Collateral,
notwithstanding anything contained in this Agreement, the Term Facility
Documents, the Revolving Facility Documents or any other agreement or instrument
to the contrary, and irrespective of the time, order or method of creation,
attachment or perfection of such Junior Liens and Senior Liens or any defect or
deficiency or alleged defect or deficiency in any of the foregoing.

(b) It is acknowledged that (i) the aggregate amount of the Senior Secured
Obligations may, subject to the limitations set forth in the Term Credit
Agreement and the Revolving Credit Agreement, be increased, (ii) a portion of
the Senior Secured Obligations consists or may consist of Indebtedness that is
revolving in nature, and the amount thereof that may be outstanding at any time
or from time to time may be increased or reduced and subsequently reborrowed,
and may arise under incremental facilities and (iii) the Senior Secured
Obligations may, subject to the limitations set forth in the Term Credit
Agreement and the Revolving Credit Agreement, be increased, extended, renewed,
replaced, restated, supplemented, restructured, repaid, refunded, refinanced or
otherwise amended or modified from time to time, all without affecting the
subordination of the Junior Liens hereunder or the provisions of this Agreement
defining the relative rights of the Revolving Facility Secured Parties and the
Term Facility Secured Parties. The lien priorities provided for herein shall not
be altered or otherwise affected by any amendment, modification, supplement,
extension, increase, replacement, renewal, restatement or refinancing of either
the Junior Secured Obligations or the Senior Secured Obligations, by the release
of any Collateral or of any guarantees securing any Senior Secured Obligations
or by any action that any Representative or Secured Party may take or fail to
take in respect of any Collateral.

SECTION 2.02. No Action With Respect to Junior Secured Obligations Collateral
Subject to Senior Liens. No Junior Representative or other Junior Secured
Obligations Secured Party shall commence or instruct any Junior Representative
to commence any judicial or nonjudicial foreclosure proceedings with respect to,
seek to have a trustee, receiver, liquidator or similar official appointed for
or over, attempt any action to take possession of, exercise any right, remedy or
power with respect to, or otherwise take any action to enforce its interest in
or realize upon, or take any other action available to it in respect of, any
Junior Secured Obligations Collateral under any Junior Secured Obligations
Security Document, applicable law or otherwise, at any time when such Junior
Secured Obligations Collateral shall be subject to any Senior Lien and any
Senior Secured Obligations secured by such Senior Lien shall remain outstanding
or any commitment to extend credit that would constitute Senior Secured
Obligations secured by such Senior Lien shall remain in effect, it being agreed
that only the Senior Representative, acting in accordance with the applicable
Senior Secured Obligations Security Documents, shall be entitled to take any
such actions or exercise any such remedies. Notwithstanding the foregoing, any
Junior Representative may, subject to Section 2.05, take all such actions as it
shall deem necessary to perfect or continue the perfection of its Junior Liens.

SECTION 2.03. No Duties of Senior Representative. Each Junior Secured
Obligations Secured Party acknowledges and agrees that neither the Senior
Representative nor any other Senior Secured Obligations Secured Party shall have
any duties or other obligations to such Junior Secured Obligations Secured Party
with respect to any Senior Secured Obligations Collateral, other than to
transfer to the Junior Representative any proceeds of any such Collateral that
constitutes Junior Secured Obligations Collateral remaining in its possession
following any sale, transfer or other disposition of such Collateral (in each
case, unless the Junior Liens on all such Junior Secured Obligations Collateral
are terminated and released prior to or concurrently with such sale, transfer,
disposition, payment or satisfaction), the payment and satisfaction in full of
the Senior Secured Obligations secured thereby and the termination of any
commitment to extend credit that would constitute Senior Secured Obligations
secured thereby, or, if the Senior Representative shall be in possession of all
or any part of such Collateral after such payment and satisfaction in full and
termination, such Collateral or any part thereof remaining, in each case without
representation or warranty on the part of the Senior Representative or any
Senior Secured Obligations Secured Party. In furtherance of the foregoing, each

 

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Junior Secured Obligations Secured Party acknowledges and agrees that until the
Senior Secured Obligations secured by any Collateral in respect of which such
Junior Secured Obligations Secured Party holds a Junior Lien shall have been
paid and satisfied in full and any commitment to extend credit that would
constitute Senior Secured Obligations secured thereby shall have been
terminated, the Senior Representative shall be entitled, for the benefit of the
holders of such Senior Secured Obligations, to sell, transfer or otherwise
dispose of or deal with such Collateral as provided herein and in the Senior
Secured Obligations Security Documents without regard to any Junior Lien or any
rights to which the holders of the Junior Secured Obligations would otherwise be
entitled as a result of such Junior Lien. Without limiting the foregoing, each
Junior Secured Obligations Secured Party agrees that neither the Senior
Representative nor any other Senior Secured Obligations Secured Party shall have
any duty or obligation first to marshal or realize upon any type of Senior
Secured Obligations Collateral (or any other collateral securing the Senior
Secured Obligations), or to sell, dispose of or otherwise liquidate all or any
portion of such Collateral (or any other collateral securing the Senior Secured
Obligations), in any manner that would maximize the return to the Junior Secured
Obligations Secured Parties, notwithstanding that the order and timing of any
such realization, sale, disposition or liquidation may affect the amount of
proceeds actually received by the Junior Secured Obligations Secured Parties
from such realization, sale, disposition or liquidation. Each of the Junior
Secured Obligations Secured Parties waives any claim such Junior Secured
Obligations Secured Party may now or hereafter have against the Senior
Representative or any other Senior Secured Obligations Secured Party (or their
representatives) arising out of (i) any actions which the Senior Representative
or the Senior Secured Obligations Secured Parties take or omit to take
(including, actions with respect to the creation, perfection or continuation of
Liens on any Collateral, actions with respect to the foreclosure upon, sale,
release or depreciation of, or failure to realize upon, any of the Collateral
and actions with respect to the collection of any claim for all or any part of
the Senior Secured Obligations from any account debtor, guarantor or any other
party) in accordance with the Senior Secured Obligations Security Documents or
any other agreement related thereto or to the collection of the Senior Secured
Obligations or the valuation, use, protection or release of any security for the
Senior Secured Obligations, (ii) any election by the Senior Representative or
any Senior Secured Obligations Secured Parties, in any proceeding instituted
under the Bankruptcy Code, of the application of Section 1111(b) of the
Bankruptcy Code or (iii) any borrowing of, or grant of a security interest or
administrative expense priority under Section 364 of the Bankruptcy Code to,
Holdings or any of its subsidiaries, as debtor-in-possession.

SECTION 2.04. No Interference; Payment Over; Reinstatement. (a) Each Junior
Secured Obligations Secured Party agrees that (i) it will not take or cause to
be taken any action the purpose or effect of which is, or could be, to make any
Junior Lien pari passu with, or to give such Junior Secured Obligations Secured
Party any preference or priority relative to, any Senior Lien with respect to
the Collateral subject to such Senior Lien and Junior Lien or any part thereof,
(ii) it will not challenge or question in any proceeding the validity or
enforceability of any Senior Secured Obligations or Senior Secured Obligations
Security Document, or the validity, attachment, perfection or priority of any
Senior Lien, or the validity or enforceability of the priorities, rights or
duties established by or other provisions of this Agreement, (iii) it will not
take or cause to be taken any action the purpose or intent of which is, or could
be, to interfere, hinder or delay, in any manner, whether by judicial
proceedings or otherwise, any sale, transfer or other disposition of the
Collateral subject to any Junior Lien by any Senior Secured Obligations Secured
Parties secured by Senior Liens on such Collateral or any Senior Representative
acting on their behalf, (iv) it shall have no right to (A) direct any Senior
Representative or any holder of Senior Secured Obligations to exercise any
right, remedy or power with respect to the Collateral subject to any Junior Lien
or (B) consent to the exercise by any Senior Representative or any other Senior
Secured Obligations Secured Party of any right, remedy or power with respect to
the Collateral subject to any Junior Lien, (v) it will not institute any suit or
assert in any suit, bankruptcy, insolvency or other proceeding any claim against
any Senior Representative or other Senior Secured Obligations Secured Party
seeking damages from or other relief by way of specific performance,
instructions or otherwise with

 

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respect to, and neither any Senior Representative nor any other Senior Secured
Obligations Secured Party shall be liable for, any action taken or omitted to be
taken by such Senior Representative or other Senior Secured Obligations Secured
Party with respect to any Collateral securing such Senior Secured Obligations
that is subject to any Junior Lien, (vi) it will not seek, and hereby waives any
right, to have any Senior Secured Obligations Collateral subject to any Junior
Lien or any part thereof marshaled upon any foreclosure or other disposition of
such Collateral and (vii) it will not attempt, directly or indirectly, whether
by judicial proceedings or otherwise, to challenge the enforceability of any
provision of this Agreement.

(b) The Junior Representative and each other Junior Secured Obligations Secured
Party hereby agrees that if it shall obtain possession of any Senior Secured
Obligations Collateral or shall realize any proceeds or payment in respect of
any such Collateral, pursuant to any Junior Secured Obligations Security
Document or by the exercise of any rights available to it under applicable law
or in any bankruptcy, insolvency or similar proceeding or through any other
exercise of remedies, at any time when any Senior Secured Obligations secured or
intended to be secured by such Collateral shall remain outstanding or any
commitment to extend credit that would constitute Senior Secured Obligations
secured or intended to be secured by such Senior Lien shall remain in effect,
then it shall hold such Collateral, proceeds or payment in trust for the Senior
Secured Obligations Secured Parties and transfer such Collateral, proceeds or
payment, as the case may be, to the Senior Representative reasonably promptly
after obtaining actual knowledge or notice from the Senior Secured Obligations
Secured Parties that it has possession of such Senior Secured Obligations
Collateral or proceeds or payments in respect thereof. Each Junior Secured
Obligations Secured Party agrees that if, at any time, it receives notice or
obtains actual knowledge that all or part of any payment with respect to any
Senior Secured Obligations previously made shall be rescinded for any reason
whatsoever, such Junior Secured Obligations Secured Party shall promptly pay
over to the Senior Representative any payment received by it and then in its
possession or under its control in respect of any Collateral subject to any
Senior Lien securing such Senior Secured Obligations and shall promptly turn any
Collateral subject to any such Senior Lien then held by it over to the Senior
Representative, and the provisions set forth in this Agreement shall be
reinstated as if such payment had not been made, until the payment and
satisfaction in full of the Senior Secured Obligations.

SECTION 2.05. Automatic Release of Junior Liens. (a) The Junior Representative
and each other Junior Secured Obligations Secured Party agree that (i) in the
event the Senior Secured Obligations Secured Parties release their Lien on any
Senior Secured Obligations Collateral subject to any Junior Lien (other than a
release in connection with a sale, transfer or other disposition of Senior
Secured Obligations Collateral, which shall be governed by clause (a)(ii)
below), such Junior Lien on such Collateral shall terminate and be released
automatically and without further action unless, at the time of such release by
the Senior Secured Obligations Secured Parties, an Event of Default shall then
have occurred and be continuing under the Junior Documents (provided that any
Junior Lien that would have otherwise been released and terminated pursuant to
this clause (a)(i) in the absence of such an Event of Default under the Junior
Documents shall terminate and be released automatically and without further
action when such Event of Default (and all other Events of Default under the
Junior Documents) cease to exist); and (ii) in the event of a sale, transfer or
other disposition of Senior Secured Obligations Collateral subject to any Junior
Lien (regardless of whether or not an Event of Default has occurred and is
continuing under the Junior Documents at the time of such sale, transfer or
other disposition), such Junior Lien on such Collateral shall terminate and be
released automatically and without further action if the applicable Senior Liens
on such Collateral are released and if such sale, transfer or other disposition
either (x) is then not prohibited by the Junior Documents or (y) occurs in
connection with the foreclosure upon or other exercise of rights and remedies
with respect to such Senior Secured Obligations Collateral; provided that such
Junior Lien shall remain in place with respect to any proceeds of a sale,
transfer or other disposition under this clause (a)(ii) that remain after the
satisfaction in full of the Senior Secured Obligations.

 

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(b) The Junior Representative agrees to execute and deliver (at the sole cost
and expense of the Grantors) all such releases and other instruments as shall
reasonably be requested by the Senior Representative to evidence and confirm any
release of Junior Secured Obligations Collateral provided for in this Section.

SECTION 2.06. Certain Agreements With Respect to Bankruptcy or Insolvency
Proceedings. (a) This Agreement shall continue in full force and effect
notwithstanding the commencement of any proceeding under the Bankruptcy Code or
any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law by or against Holdings or any of its subsidiaries.

(b) If Holdings or any of its subsidiaries shall become subject to a case under
the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of
financing (“DIP Financing”) to be provided by one or more lenders (the “DIP
Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral
with the consent of the DIP Lenders under Section 363 of the Bankruptcy Code,
each Junior Secured Obligations Secured Party agrees that it will raise no
objection to any such financing or to the Liens on the Senior Secured
Obligations Collateral securing the same (“DIP Financing Liens”) or to any use
of cash collateral that constitutes Senior Secured Obligations Collateral,
unless the Senior Secured Obligations Secured Parties, or a representative
authorized by the Senior Secured Obligations Secured Parties, shall then oppose
or object to such DIP Financing or such DIP Financing Liens or use of cash
collateral (and, to the extent that such DIP Financing Liens are senior to, or
rank pari passu with, the Senior Liens, the Junior Representative will, for
itself and on behalf of the other Junior Secured Obligations Secured Parties,
subordinate the Junior Liens on the Senior Secured Obligations Collateral to the
Senior Liens and the DIP Financing Liens), so long as the Junior Secured
Obligations Secured Parties retain Liens on all the Junior Secured Obligations
Collateral, including proceeds thereof arising after the commencement of such
proceeding, with the same priority as existed prior to the commencement of the
case under the Bankruptcy Code.

(c) Each Junior Secured Obligations Secured Party agrees that it will not object
to or oppose a sale or other disposition of any Senior Secured Obligations
Collateral (or any portion thereof) under Section 363 of the Bankruptcy Code or
any other provision of the Bankruptcy Code if the Senior Secured Obligations
Secured Parties shall have consented to such sale or disposition of such Senior
Secured Obligations Collateral.

SECTION 2.07. Reinstatement. In the event that any of the Senior Secured
Obligations shall be paid in full and such payment or any part thereof shall
subsequently, for whatever reason (including an order or judgment for
disgorgement of a preference under the Bankruptcy Code, or any similar law, or
the settlement of any claim in respect thereof), be required to be returned or
repaid, the terms and conditions of this Article II shall be fully applicable
thereto until all such Senior Secured Obligations shall again have been paid in
full in cash.

SECTION 2.08. Entry Upon Premises by the Revolving Collateral Agent and the
Revolving Lenders. (a) If the Revolving Collateral Agent takes any enforcement
action with respect to the Revolving Facility First Lien Collateral, the Term
Facility Secured Parties (i) shall cooperate with the Revolving Collateral Agent
(at the sole cost and expense of the Revolving Collateral Agent and subject to
the condition that the Term Facility Secured Parties shall have no obligation or
duty to take any action or refrain from taking any action that could reasonably
be expected to result in the incurrence of any liability by, or damage to, the
Term Facility Secured Parties) in its efforts to enforce its security interest
in the Revolving Facility First Lien Collateral and to finish any
work-in-process and assemble the Revolving

 

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Facility First Lien Collateral, (ii) shall not take any action designed or
intended to hinder or restrict in any respect the Revolving Collateral Agent
from enforcing its security interest in the Revolving Facility First Lien
Collateral or from finishing any work-in-process or assembling the Revolving
Facility First Lien Collateral, and (iii) shall permit the Revolving Collateral
Agent, its employees, agents, advisers and representatives, at the sole cost and
expense of the Revolving Facility Secured Parties and upon reasonable advance
notice, to enter upon and use the Term Facility First Lien Collateral (including
(x) equipment, processors, computers and other machinery related to the storage
or processing of records, documents or files and (y) intellectual property), for
a period not to exceed 180 days after the taking of such enforcement action, for
purposes of (A) assembling and storing the Revolving Facility First Lien
Collateral and completing the processing of and turning into finished goods of
any Revolving Facility First Lien Collateral consisting of work-in-process,
(B) selling any or all of the Revolving Facility First Lien Collateral located
on such Term Facility First Lien Collateral, whether in bulk, in lots or to
customers in the ordinary course of business or otherwise, (C) removing any or
all of the Revolving Facility First Lien Collateral located on such Term
Facility First Lien Collateral, or (D) taking reasonable actions to protect,
secure, and otherwise enforce the rights of the Revolving Facility Secured
Parties in and to the Revolving Facility First Lien Collateral; provided,
however, that nothing contained in this Agreement shall restrict the rights of
the Term Collateral Agent or the Term Collateral Agent from selling, assigning
or otherwise transferring any Term Facility First Lien Collateral prior to the
expiration of such 180 day period if the purchaser, assignee or transferee
thereof agrees to be bound by the provisions of this Section. If any stay or
other order prohibiting the exercise of remedies with respect to the Revolving
Facility First Lien Collateral has been entered by a court of competent
jurisdiction, such 180 day period shall be tolled during the pendency of any
such stay or other order. If the Revolving Collateral Agent conducts a public
auction or private sale of the Revolving Facility First Lien Collateral at any
of the real property included within the Term Facility First Lien Collateral,
the Revolving Collateral Agent shall provide the Term Collateral Agent with
reasonable notice and use reasonable efforts to hold such auction or sale in a
manner which would not unduly disrupt the Term Collateral Agent’s use of such
real property.

(b) During the period of actual occupation, use or control by the Revolving
Facility Secured Parties or their agents or representatives of any Term Facility
First Lien Collateral, the Revolving Facility Secured Parties shall (i) be
responsible for the ordinary course third party expenses related thereto,
including costs with respect to heat, light, electricity, water and real
property taxes with respect to that portion of any premises so used or occupied,
and (ii) be obligated to repair at their expense any physical damage to such
Term Facility First Lien Collateral or other assets or property resulting from
such occupancy, use or control, and to leave such Term Facility First Lien
Collateral or other assets or property in substantially the same condition as it
was at the commencement of such occupancy, use or control, ordinary wear and
tear excepted. The Revolving Facility Secured Parties jointly and severally
agree to pay, indemnify and hold the Term Collateral Agent and the Term
Collateral Agent and their respective officers, directors, employees and agents
harmless from and against any liability, cost, expense, loss or damages,
including legal fees and expenses, resulting from the gross negligence or
willful misconduct of the Revolving Collateral Agent or any of its agents,
representatives or invitees in its or their operation of such facilities. In the
event, and only in the event, that in connection with its use of some or all of
the premises constituting Term Facility First Lien Collateral, the Revolving
Collateral Agent requires the services of any employees of Holdings or any of
its subsidiaries, the Revolving Collateral Agent shall pay directly to any such
employees the appropriate, allocated wages of such employees, if any, during the
time periods that the Revolving Collateral Agent requires their services.
Notwithstanding the foregoing, in no event shall the Revolving Facility Secured
Parties have any liability to the Term Facility Secured Parties pursuant to this
Section as a result of any condition (including any environmental condition,
claim or liability) on or with respect to the Term Facility First Lien
Collateral existing prior to the date of the exercise by the Revolving Facility
Secured Parties of their rights under this Section, and the Revolving Facility
Secured Parties shall have no duty or liability to maintain the

 

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Term Facility First Lien Collateral in a condition or manner better than that in
which it was maintained prior to the use thereof by the Revolving Facility
Secured Parties, or for any diminution in the value of the Term Facility First
Lien Collateral that results solely from ordinary wear and tear resulting from
the use of the Term Facility First Lien Collateral by the Revolving Facility
Secured Parties in the manner and for the time periods specified under this
Section 2.08. Without limiting the rights granted in this paragraph, the
Revolving Facility Secured Parties shall cooperate with the Term Facility
Secured Parties in connection with any efforts made by the Term Facility Secured
Parties to sell the Term Facility First Lien Collateral.

SECTION 2.09. Insurance. Unless and until written notice by the Revolving
Collateral Agent to the Term Collateral Agent that the Revolving Facility
Obligations have been paid in full and all commitments to extend credit under
the Revolving Credit Agreement shall have been terminated, as between the
Revolving Collateral Agent, on the one hand, and the Term Collateral Agent, on
the other hand, only the Revolving Collateral Agent will have the right (subject
to the rights of the Grantors under the Revolving Facility Documents and the
Term Facility Documents) to adjust or settle any insurance policy or claim
covering or constituting Revolving Facility First Lien Collateral in the event
of any loss thereunder and to approve any award granted in any condemnation or
similar proceeding affecting the Revolving Facility First Lien Collateral.
Unless and until written notice by the Term Collateral Agent to the Revolving
Collateral Agent that the Term Facility Obligations have been paid in full, as
between the Revolving Collateral Agent, on the one hand, and the Term Collateral
Agent and the Term Collateral Agent, as the case may be, on the other hand, only
the Term Collateral Agent will have the right (subject to the rights of the
Grantors under the Revolving Facility Documents and the Term Facility Documents)
to adjust or settle any insurance policy covering or constituting Term Facility
First Lien Collateral in the event of any loss thereunder and to approve any
award granted in any condemnation or similar proceeding solely affecting the
Term Facility First Lien Collateral. To the extent that an insured loss covers
or constitutes both Revolving Facility First Lien Collateral and Term Facility
First Lien Collateral, then the Revolving Collateral Agent and the Term
Collateral Agent will work jointly and in good faith to collect, adjust or
settle (subject to the rights of the Grantors under the Revolving Facility
Documents and the Term Facility Documents) under the relevant insurance policy.

SECTION 2.10. Refinancings. The Revolving Facility Obligations and the Term
Facility Obligations may be refinanced or replaced, in whole or in part, in each
case, without notice to, or the consent (except to the extent a consent is
otherwise required to permit the refinancing transaction under any Revolving
Facility Document or any Term Facility Document) of any Revolving Facility
Secured Party or any Term Facility Secured Party, all without affecting the Lien
priorities provided for herein or the other provisions hereof; provided,
however, that the holders of any such refinancing or replacement indebtedness
(or an authorized agent or trustee on their behalf) bind themselves in writing
to the terms of this Agreement pursuant to such documents or agreements
(including amendments or supplements to this Agreement) as the Revolving
Collateral Agent or the Term Collateral Agent, as the case may be, shall
reasonably request and in form and substance reasonably acceptable to the
Revolving Collateral Agent or the Term Collateral Agent, as the case may be. In
connection with any refinancing or replacement contemplated by this
Section 2.10, this Agreement may be amended at the request and sole expense of
the Company, and without the consent of either Representative, (a) to add
parties (or any authorized agent or trustee therefor) providing any such
refinancing or replacement indebtedness, (b) to establish that Liens on any Term
Facility First Lien Collateral securing such refinancing or replacement
indebtedness shall have the same priority as the Liens on any Term Facility
First Lien Collateral securing the indebtedness being refinanced or replaced and
(c) to establish that the Liens on any Revolving Facility First Lien Collateral
securing such refinancing or replacement indebtedness shall have the same
priority as the Liens on any Revolving Facility First Lien Collateral securing
the indebtedness being refinanced or replaced, all on the terms provided for
herein immediately prior to such refinancing or replacement.

 

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SECTION 2.11. Amendments to Security Documents. (a) Without the prior written
consent of the Senior Representative, no Junior Secured Obligations Security
Document may be amended, supplemented or otherwise modified or entered into to
the extent such amendment, supplement or modification, or the terms of any new
Junior Secured Obligations Security Document, would be prohibited by, or would
require any Grantor to act or refrain from acting in a manner that would
violate, any of the terms of this Agreement.

(b) In the event that the Senior Representative enters into any amendment,
waiver or consent in respect of any of the Senior Secured Obligations Security
Documents for the purpose of adding to, or deleting from, or waiving or
consenting to any departures from any provisions of, any Senior Secured
Obligations Security Document or changing in any manner the rights of the Senior
Representative, the Senior Secured Obligations Secured Parties, the Company or
any other Grantor thereunder (including the release of any Liens in Senior
Secured Obligations Collateral permitted by Section 2.05), then such amendment,
waiver or consent shall apply automatically to any comparable provision of the
comparable Junior Secured Obligations Security Document without the consent of
the Junior Representative or any Junior Secured Obligations Secured Party and
without any action by the Junior Representative, the Company or any other
Grantor; provided, however, that written notice of such amendment, waiver or
consent shall have been given to the Junior Representative.

SECTION 2.12. Legends. The Revolving Collateral Agent acknowledges with respect
to the Revolving Facility Security Documents, and the Term Collateral Agent
acknowledge with respect to the Term Facility Security Documents, that each
Security Document will contain the appropriate legend set forth on Annex I.

ARTICLE III

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS;

RIGHTS UNDER PERMITS AND LICENSES

SECTION 3.01. General. The Senior Representative agrees that if it shall at any
time hold a Senior Lien on any Junior Secured Obligations Collateral that can be
perfected by the possession or control of such Collateral or of any account in
which such Collateral is held, and if such Collateral or any such account is in
fact in the possession or under the control of the Senior Representative, the
Senior Representative will serve as gratuitous bailee for the Junior
Representative for the sole purpose of perfecting the Junior Lien of the Junior
Representative on such Collateral. It is agreed that the obligations of the
Senior Representative and the rights of the Junior Representative and the other
Junior Secured Obligations Secured Parties in connection with any such bailment
arrangement will be in all respects subject to the provisions of Article II.
Notwithstanding anything to the contrary herein, the Senior Representative will
be deemed to make no representation as to the adequacy of the steps taken by it
to perfect the Junior Lien on any such Collateral and shall have no
responsibility, duty, obligation or liability to the Junior Representative or
other Junior Secured Obligations Secured Party or any other person for such
perfection or failure to perfect, it being understood that the sole purpose of
this Article is to enable the Junior Secured Obligations Secured Parties to
obtain a perfected Junior Lien in such Collateral to the extent, if any, that
such perfection results from the possession or control of such Collateral or any
such account by the Senior Representative. Subject to Section 2.07, at such time
as the Senior Secured Obligations secured by the Senior Lien of the Senior
Representative shall have been paid and satisfied in full and any commitment to
extend credit that would constitute such Senior Secured Obligations shall have
been terminated, the Senior Representative shall take all such actions in its
power as shall reasonably be requested by the Junior Representative (at the sole
cost and expense of the Grantors) to transfer possession or control of such
Collateral or any such account (in each case to the extent the Junior
Representative has a Lien on such Collateral or account after giving effect to
any prior or concurrent releases of Liens) to the Junior Representative.

 

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SECTION 3.02. Lock-Box Accounts. Holdings and its subsidiaries, to the extent
required by the Revolving Credit Agreement, shall maintain lock-boxes relating
to depositary accounts (the “Depositary Accounts”, which term shall include the
Revolving Facility Concentration Account) with certain depositary banks (the
“Depositary Banks”) in which collections from any Inventory and Accounts are
deposited. The Revolving Collateral Agent will act as gratuitous bailee for the
Term Collateral Agent and the Term Collateral Agent for the purpose of
perfecting the Liens of the Term Facility Secured Parties in all such Depositary
Accounts and the cash and other assets therein as provided in Section 3.01 (but
will have no duty, responsibility or obligation to the Term Facility Secured
Parties except as set forth in the last sentence of this Section). Unless the
Junior Liens on such Revolving Facility First Lien Collateral shall have been or
concurrently are released, after the occurrence of the Revolving Facility First
Lien Collateral Transition Date, the Revolving Collateral Agent shall (a) at the
request of the Term Collateral Agent, transfer all cash and other assets in the
Revolving Facility Concentration Account and any such other Depositary Account
maintained with it to the Term Collateral Agent and (b) at the request of the
Term Collateral Agent, cooperate with the Company and the Term Collateral Agent
(at the expense of the Company) in permitting control of any other Depositary
Accounts to be transferred to the Term Collateral Agent (or for other
arrangements with respect to each such Depositary Account satisfactory to the
Term Collateral Agent to be made).

SECTION 3.03. Rights under Permits and Licenses. The Term Collateral Agent
agrees that if the Revolving Collateral Agent shall require rights available
under any permit or license controlled by the Term Collateral Agent in order to
realize on any Revolving Facility First Lien Collateral, the Term Collateral
Agent shall take all such actions as shall be available to it (at the sole
expense of the Grantors), consistent with applicable law and reasonably
requested by the Revolving Collateral Agent to make such rights available to the
Revolving Collateral Agent, subject to the Term Facility Liens. The Revolving
Collateral Agent agrees that if the Term Collateral Agent shall require rights
available under any permit or license controlled by the Revolving Collateral
Agent in order to realize on any Term Facility First Lien Collateral, the
Revolving Collateral Agent shall take all such actions as shall be available to
it (at the sole expense of the Grantors), consistent with applicable law and
reasonably requested by the Term Collateral Agent to make such rights available
to the Term Collateral Agent, subject to the Revolving Facility Liens.

ARTICLE IV

EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS

SECTION 4.01. Information as to Obligations and Liens. Whenever a Representative
shall be required, in connection with the exercise of its rights or the
performance of its obligations hereunder, to determine the existence or amount
of any Senior Secured Obligations (or the existence of any commitment to extent
credit that would constitute Senior Secured Obligations) or Junior Secured
Obligations, or the existence of any Lien securing any such obligations, or the
Collateral subject to any such Lien, it may request that such information be
furnished to it in writing by the other Representative and shall be entitled to
make such determination on the basis of the information so furnished; provided,
however, that if a Representative shall fail or refuse reasonably promptly to
provide the requested information, the requesting Representative shall be
entitled to make any such determination by such method as it may, in the
exercise its good faith judgment, determine, including by reliance upon a
certificate of the Company. Each Representative may rely conclusively, and shall
be fully protected in so relying, on any determination made by it in accordance
with the provisions of the preceding sentence (or as otherwise directed by a
court of competent jurisdiction) and shall have no liability to Holdings or any
of its subsidiaries, any Secured Party or any other person as a result of such
determination.

 

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ARTICLE V

CONSENT OF GRANTORS

SECTION 5.01. Consent of Grantors. Each Grantor hereby consents to the
provisions of this Agreement and the intercreditor arrangements provided for
herein and agrees that the obligations of the Grantors under the Security
Documents will in no way be diminished or otherwise affected by such provisions
or arrangements (except as expressly provided herein).

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

SECTION 6.01. Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party.

(c) The execution, delivery and performance by such party of this Agreement
(i) do not require any consent or approval of, registration or filing with or
any other action by any governmental authority of which the failure to obtain
could reasonably be expected to have a Material Adverse Effect (as defined in
the Revolving Credit Agreement or the Term Credit Agreement), (ii) will not
violate any applicable law or regulation or any order of any governmental
authority or any indenture, agreement or other instrument binding upon such
party which could reasonably be expected to have a Material Adverse Effect and
(iii) will not violate the charter, by-laws or other organizational documents of
such party.

SECTION 6.02. Representations and Warranties of Each Representative. Each of the
Term Collateral Agent and the Revolving Collateral Agent represents and warrants
to the other parties hereto that it is authorized under the Term Credit
Agreement and the Revolving Credit Agreement, respectively, to enter into this
Agreement.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01. Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Revolving Collateral Agent, to it at Bank of America, N.A., 335
Madison Avenue, New York, New York 10017, Attention of Robert Scalzetti
(Telecopy No. (212) 503-7330);

(b) if to the Term Collateral Agent, to it at Credit Suisse AG, 11 Madison
Avenue, New York, NY 10010 Attention of Nirmala Durgana (Telecopy No.
(212) 538-3525);

(c) if to Holdings or the Company, to it at Metals USA, Inc., 2400 E. Commercial
Blvd, Suite 905, Fort Lauderdale, FL 33308, attention of William Smith, Senior
Vice President, Chief Legal Officer at wsmith@metalsusa.com; and

 

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(d) if to any other Grantor, to it in care of the Company as provided in clause
(c) above.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (and for this
purpose a notice to the Company shall be deemed to be a notice to each Grantor).
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt (if a Business Day) and on the next Business Day thereafter (in
all other cases) if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 7.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 7.01. As agreed to in writing among the Company, the Term Collateral
Agent and the Revolving Collateral Agent from time to time, notices and other
communications may also be delivered by e-mail to the e-mail address of a
representative of the applicable person provided from time to time by such
person.

SECTION 7.02. Waivers; Amendment. (a) No failure or delay on the part of any
party hereto in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereto are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on any party hereto in any case shall entitle
such party to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be terminated, waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by each Representative, Holdings and the Company; provided,
however, that this Agreement may be amended from time to time (x) as provided in
Section 2.10 and (y) at the sole request and expense of the Company, and without
the consent of either Representative, (i) (A) to add other parties (or any
authorized agent thereof or trustee therefor) holding Other Pari Passu Term
Indebtedness that is incurred in compliance with the Revolving Facility
Documents and the Term Facility Documents, (B) to establish that the Liens on
any Term Facility First Lien Collateral securing such Other Pari Passu Term
Indebtedness shall be pari passu hereunder with the Liens on such Term Facility
First Lien Collateral securing the Term Facility Obligations and senior to the
Liens on such Term Facility First Lien Collateral securing any Revolving
Facility Obligations, all on the terms provided for herein immediately prior to
such amendment and (C) to establish that the Liens on any Revolving Facility
First Lien Collateral securing such Other Pari Passu Term Indebtedness shall be
pari passu hereunder with the Liens on such Revolving Facility First Lien
Collateral securing the Term Facility Obligations and junior and subordinated to
the Liens on such Revolving Facility First Lien Collateral securing any
Revolving Facility Obligations, all on the terms provided for herein immediately
prior to such amendment, and (ii) (A) to add other parties (or any authorized
agent thereof or trustee therefor) holding Other Pari Passu Revolving
Indebtedness that is incurred in compliance with the Revolving Facility
Documents and the Term Facility Documents, (B) to establish that the Liens on
any Revolving Facility First Lien Collateral securing such Other Pari Passu
Revolving Indebtedness shall be pari passu hereunder with the Liens on such
Revolving Facility First Lien Collateral securing the Revolving Facility
Obligations and senior to the Liens on such Revolving Facility First Lien
Collateral securing any Term Facility Obligations, all on the terms provided for
herein immediately prior to such amendment and (C) to establish that the Liens
on any Term Facility First Lien Collateral securing such Other Pari Passu
Revolving Indebtedness shall be pari passu hereunder with the

 

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Liens on such Term Facility First Lien Collateral securing the Revolving
Facility Obligations and junior and subordinated to the Liens on such Term
Facility First Lien Collateral securing any Term Facility Obligations, all on
the terms provided for herein immediately prior to such amendment. Any such
additional party and each party hereto shall be entitled to rely upon a
certificate delivered by an officer of the Company certifying that such Other
Pari Passu Term Indebtedness or Other Pari Passu Revolving Indebtedness, as the
case may be, was borrowed in compliance with the Revolving Facility Documents
and the Term Facility Documents. Any amendment of this Agreement that is
proposed to be effected without the consent of a Representative as permitted by
the proviso to the preceding sentence shall be submitted to such Representative
for its review at least five Business Days prior to the proposed effectiveness
of such amendment.

SECTION 7.03. Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, as well as the other Term Facility Secured Parties and Revolving
Facility Secured Parties, all of whom are intended to be bound by, and to be
third party beneficiaries of, this Agreement.

SECTION 7.04. Survival of Agreement. All covenants, agreements, representations
and warranties made by any party in this Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement.

SECTION 7.05. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

SECTION 7.06. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7.07. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party hereto may otherwise have to bring any action or
proceeding relating to this Agreement in the courts of any jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

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(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 7.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 7.08. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 7.09. Headings. Article, Section and Annex headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

SECTION 7.10. Conflicts. In the event of any conflict or inconsistency between
the provisions of this Agreement and the provisions of any of the other
Revolving Facility Documents and/or Term Facility Documents, the provisions of
this Agreement shall control.

SECTION 7.11. Provisions Solely to Define Relative Rights. The provisions of
this Agreement are and are intended solely for the purpose of defining the
relative rights of the Revolving Facility Secured Parties, on the one hand, and
the Term Facility Secured Parties, on the other hand. None of Holdings, the
Company, any other Grantor or any other creditor thereof shall have any rights
or obligations hereunder, except as expressly provided in this Agreement
(provided that nothing in this Agreement (other than Sections 2.05, 2.06, 2.10,
2.11 or Article VII) is intended to or will amend, waive or otherwise modify the
provisions of the Revolving Credit Agreement or the Term Credit Agreement), and
none of Holdings, the Company, or any other Grantor may rely on the terms hereof
(other than Sections 2.05, 2.06, 2.10, 2.11, Article VI and Article VII).
Nothing in this Agreement is intended to or shall impair the obligations of
Holdings, the Company or any other Grantor, which are absolute and
unconditional, to pay the Obligations as and when the same shall become due and
payable in accordance with their terms. Notwithstanding anything to the contrary
herein, in any Term Facility Document or any Revolving Facility Document, the
Grantors shall not be required to act or refrain from acting (a) pursuant to
this Agreement or any Term Facility Document with respect to any Revolving
Facility First Lien Collateral in any manner that would cause a default under
any Revolving Facility Document, or (b) pursuant to this Agreement or any
Revolving Facility Document with respect to any Term Facility First Lien
Collateral in any manner that would cause a default under any Term Facility
Document.

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

 

FLAG INTERMEDIATE HOLDINGS CORPORATION By:   /s/ Robert C. McPherson III   Name:
Robert C. McPherson III   Title: Senior Vice President & Chief Financial Officer
METALS USA, INC. By:   /s/ Robert C. McPherson III   Name: Robert C. McPherson
III   Title: Chief Financial Officer & Treasurer

 

Signature Page to the Intercreditor Agreement

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ALLMET GP, INC.

ALLMET LP, INC.

CONTINENTAL REAL ESTATE DEVELOPMENT, INC.

GREGOR TECHNOLOGIES, L.L.C.

INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.

INTSEL GP, INC.

INTSEL LP, INC.

INSTRUMENT CASES, L.L.C.

i-SOLUTIONS DIRECT, INC.

J. RUBIN & CO.

LEVINSON STEEL GP, INC.

LEVINSON STEEL LP, INC.

METALS USA BUILDING PRODUCTS, L.P.

  By: Allmet GP, Inc., its General Partner

METALS USA CARBON FLAT ROLLED, INC.

METALS USA FLAT ROLLED CENTRAL, INC.

METALS USA INTERNATIONAL HOLDINGS, INC.

METALS USA PLATE PROCESSING, LLC

  By: Metals USA Plates and Shapes, Northeast, L.P., its Member   By: Levinson
Steel GP, Inc., as General Partner of Metals USA Plates and Shapes, Northeast,
L.P. METALS USA PLATES AND SHAPES, NORTHEAST, L.P.   By: Levinson Steel GP,
Inc., its General Partner METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC. METALS
USA PLATES AND SHAPES SOUTHEAST, INC.

METALS USA PLATES AND SHAPES SOUTHWEST, LIMITED PARTNERSHIP

  By: Intsel GP, Inc., its General Partner

METALS USA SPECIALTY METALS NORTHCENTRAL, INC.

MUSA NEWARK, L.L.C.

  By: Metals USA Plates and Shapes, Northeast, L.P., its Member   By: Levinson
Steel GP, Inc., as General Partner of Metals USA Plates and Shapes, Northeast,
L.P.

OHIO RIVER METAL SERVICES, INC.

QUEENSBORO, L.L.C.

  By: Metals USA Plates and Shapes Southeast, Inc. By:   /s/ Daniel L. Henneke  
Name: Daniel L.Henneke   Title: Treasurer

 

Signature Page to the Intercreditor Agreement

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JEFFREYS REAL ESTATE CORPORATION

METALS RECEIVABLES CORPORATION

METALS USA FINANCE CORP.

METALS USA MANAGEMENT CO., L.P.

  By: MUSA GP, Inc., its General Partner

METALS USA REALTY COMPANY

MUSA GP, INC.

MUSA LP, INC.

By:   /s/ Robert C. McPherson III   Name: Robert C. McPherson III   Title:
Treasurer

 

Signature Page to the Intercreditor Agreement

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ALABAMA METAL SERVICES, L.L.C.

JEFFREYS STEEL HOLDINGS, L.L.C.

THE RICHARDSON TRIDENT COMPANY, L.L.C.

By:   /s/ William A. Smith II   Name: William A. Smith II   Title: Manager

 

Signature Page to the Intercreditor Agreement

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BANK OF AMERICA, N.A., as Revolving Collateral Agent By:   /s/ Robert Scalzitti
  Name: Robert Scalzitti   Title: Senior Vice President

 

Signature Page to the Intercreditor Agreement

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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH as Term Collateral Agent By:   /s/
Robert Hetu   Name: Robert Hetu   Title: Managing Director By:   /s/ Alex
Verdone   Name: Alex Verdone   Title: Associate

 

Signature Page to the Intercreditor Agreement

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ANNEX I

Provision for the Revolving Credit Agreement and the Term Credit Agreement

Reference is made to the Lien Subordination and Intercreditor Agreement to be
entered into as of the date hereof among Bank of America, N.A., as collateral
agent for the Revolving Facility Secured Parties referred to therein; Credit
Suisse, AG., as collateral agent for the Term Facility Secured Parties referred
to therein; Flag Intermediate Holdings Corporation; Metals USA, Inc.; and the
other subsidiaries of Metals USA, Inc. named therein (the “Intercreditor
Agreement”). Each Lender hereunder (a) consents to the subordination of Liens
provided for in the Intercreditor Agreement, (b) agrees that it will be bound by
and will take no actions contrary to the provisions of the Intercreditor
Agreement and (c) authorizes and instructs the Collateral Agent to enter into
the Intercreditor Agreement as Collateral Agent and on behalf of such Lender.
The foregoing provisions are intended as an inducement to the Lenders to extend
credit and such Lenders are intended third party beneficiaries of such
provisions and the provisions of the Intercreditor Agreement.

Provision for Revolving Facility Security Documents and Term Facility Security
Documents

Reference is made to the Lien Subordination and Intercreditor Agreement dated as
of December 14, 2012, among Bank of America, N.A., as Collateral Agent for the
Revolving Facility Secured Parties referred to therein; Credit Suisse, AG, as
collateral agent for the Term Facility Secured Parties referred to therein; Flag
Intermediate Holdings Corporation; Metals USA, Inc.; and the subsidiaries of
Metals USA, Inc. named therein (the “Intercreditor Agreement”). Notwithstanding
any other provision contained herein, this Agreement, the Liens created hereby
and the rights, remedies, duties and obligations provided for herein are subject
in all respects to the provisions of the Intercreditor Agreement and, to the
extent provided therein, the applicable Senior Secured Obligations Security
Documents (as defined in the Intercreditor Agreement). In the event of any
conflict or inconsistency between the provisions of this Agreement and the
Intercreditor Agreement, the provisions of the Intercreditor Agreement shall
control.